My first self-assessment - some advice needed

[Tiggy_dorset]

Do I claim my air compressor, blast pot and laptop as expense?
Although I officially registered as self-employed at the end of September 2012, the above items were purchased shortly before that date; is it still possible to claim for them.

I am not VAT registered by the way, simply self-employed with a company name.

Cheers.

 

[F.J.]

I cant remember what my accountant did but when I was setting myself up I was still employed and bought a lot of my gear with savings ie, van, welder, grinders etc.... and as long as I had receipts for everything they said to submit them. I bought some stuff as far as 7-8 months before my corporation date

 

[mfletch]

yep put everything through as expenses don't forget cloths/ boots/shoes

 

[rtbcomp]

Those bits are capital, not expenses. There may be a scheme whereby you can claim 100% against tax in the first year, ask HMRC or your accountant. Otherwise you'll have to claim 25% depreciation each year. This latter method may be better if you don't make a taxable profit in the first one or two years.

 

[BrokenBiker]

if its used for work and you have proof of purchase (this does not always mean receipt, I claimed for a megger on expenses with a bank statement that showed the payment to the shop) then put it through.

 

[Keith 66]

Its worth paying an accountant to do all this for you, put all expenses down, he or she will save you more money than they cost.

 

[rtbcomp]

Its worth paying an accountant to do all this for you, put all expenses down, he or she will save you more money than they cost.

Think hard about that one. You could end up paying a pound to save a penny. It depends how complicated your business is and your turnover. In any event find out what he charges and go for a self-employed one working from home.

 

[snowcat]

There would be no problem on claiming the 100% for the capital allowance on equipment, The only problem with CA, is if you sell it over your book price (your allowance for deprecation each year) then it suddenly rears its head as profit and becomes taxable.

Your laptop and any related software would be shown else-ware on the books, I then put expenses against the different enterprises within the business, and then put invoices when paid into the enterprise it relates to, The more detail you add into your books the easier it is to project budgets.

If your a simple business with low turnover then accountants are not necessary, They become more important with decent profit margins as your looking for a way to bury tax.

 

[AndyStobbs]

I'm still doing my own books. As snowcat says, when it gets to the stage where the accountant will save you more money than they charge then its worthwhile. Until then youre better off with the money in your own pocket - assuming you've got the patience.

 

[BrokenBiker]

i do my own books, but they are fairly basic to be honest. I have the added advantage of having a brother that is a registered accountant so anything I need help with he does it for me

 

[Tiggy_dorset]

I cant remember what my accountant did but when I was setting myself up I was still employed and bought a lot of my gear with savings ie, van, welder, grinders etc.... and as long as I had receipts for everything they said to submit them. I bought some stuff as far as 7-8 months before my corporation date

Similar to me in that I bought stuff to set myself up before I announced being self-employed. I went self-employed in sept 2012 and continued working part time for another company as PAYE for 4 months after, before being fully self-employed.

My first tax return is for 6 months with a turnover of just 7k (not including my part time PAYE job), so I guess not yet in the bracket to advantage from an acountant?

 

[snowcat]

profit is the only taxable part, your previous PAYE has probably pushed you over the threshold to pay tax under 9k you will not have any to pay, If your a Limited Company accountancy is bit more complex as profits are paid as a dividend, If your not your profits would end up in a capital account into which you would draw any income you need, There are quite allot of expenses you can legally put down as a %, For example I put house hold heating oil, some household electric, some land line use, Fuel, Car Costs, etc can all be put into expenses, But THEY must be justified so I couldn't put these down as being 100% business, Your better off using your business to own and pay for as much as you can and ending up with a small profit and drawings, Remember the more profit the more Tax your Pay.

Dont forget when you do become profitable, you will start to pay tax on account, which is blurred distorted figure based on factors such as valuation, historic, and averaging figures, So you will always need money in the bank to meet January's payment.

If your not familiar with book keeping Id deftly do an evening class on it (again its deductible), Good bookkeeping is essential to any business and iv seen plenty of Guys set up on there own and failed not because there bad at the job or no work but because they haven't got a clue on there costs, Micro or huge corporation, An Accountant could then do you a year end set of accounts and file your Self assessment for not much money.

As I said tho this year file it off and there be little to pay. Next year though you might be in the 40% tax band and need a good accountant!

 

[Rocketman]

If you business is always with companies and not the general public it is definitely worth looking at getting VAT registered as well. And depending how much you buy in could also have a bearing on whether to go on the flat rate VAT scheme.

 

[Tiggy_dorset]

Thanks for the resposes guys. I have just submitted my returns and seems I owe a mere £567 in NIC class4 contributions for the 6 month period. If things dont look right, Im sure the tax bods will be in contact lol; which is fine as my records are fairly organised.

There is a book-keeping course local to me, so I will be signing myself up for sure. After that I will look into the pros/cons of hiring an accountant and the possibility of going VAT registered. I am still learning the ropes, so I dont want to overcomplicate things for my poor brain at the moment

Thanks all for the input.

 

[Rocketman]

You don't need to be in a rush to be VAT registered because you can back date up to 2 years, though I think it's on 6 months for consumables like petrol, paper, etc.

But it's def a no brainer if you only work mainly for companies who are VAT registered.

 

[Tiggy_dorset]

You don't need to be in a rush to be VAT registered because you can back date up to 2 years, though I think it's on 6 months for consumables like petrol, paper, etc.

But it's def a no brainer if you only work mainly for companies who are VAT registered.

I do work mainly for VAT reg companies, so I will look further into this. Cheers

 

[snowcat]

You don't need to be in a rush to be VAT registered because you can back date up to 2 years, though I think it's on 6 months for consumables like petrol, paper, etc.

But it's def a no brainer if you only work mainly for companies who are VAT registered.

Fuel normally needs to be scale charged tho, HMRC is very suspicious of individuals that do a 100% reclaim. You are far better off blanket scale charging all the fuel, It is quite legitimate however to run a pool system for all vechials including your own private Car, and reclaim on all the parts, as long as there is some business use.

BE very careful with the VAT men, they make the Inland look like pussycats, IMHO if your small and run under the threshold stay there.

 

[Tiggy_dorset]

Fuel normally needs to be scale charged tho, HMRC is very suspicious of individuals that do a 100% reclaim. You are far better off blanket scale charging all the fuel, It is quite legitimate however to run a pool system for all vechials including your own private Car, and reclaim on all the parts, as long as there is some business use.

BE very careful with the VAT men, they make the Inland look like pussycats, IMHO if your small and run under the threshold stay there.

I keep a record of all business mileage and worked the cost with their price/mile figure. I didnt go the fuel reciept route as I use the vehicle for personal aswell; If this is what you are refering to.

 

[snowcat]

I keep a record of all business mileage and worked the cost with their price/mile figure. I didnt go the fuel reciept route as I use the vehicle for personal aswell; If this is what you are refering to.

No sorry I was referring to the reclaim of VAT on fuel in registered business, Scale charging is an averaging figure used to split the cost between business and private. Your however talking about Capital Expenditure, with your system your not scale charging but working on the actual usage which is just fine.

We use scale charging as the business owns around 7 Cars and vans and it would become a real PITA working on actual costings. Although as the commercials have all had VAT reclaimed technically they shouldn't even be used to pop to the shops, or drop the kids off at school.

Commercials are 100% deductable but as Pickups became the must have IR have tightened up on the rules so a proof of usage may be required, Inland like nice average figures that look realistic they dont have to be spot on. As your a start up business HMRC will take an interest in you, especially after a few years trading, there be looking for cash in your pocket, and expenses that dont match inputs to outputs.

If and when you do start using an accountant it may be worth insuring against the costs of a tax investigation, For us the cost of a 3 month investigation could amount to 25K just in accountancy fees.

 

[Rocketman]

Sorry I disagree on the VAT. If you are buying stuff for jobs 20% is a lot to loose on all materials and consumables.

At the very least go on the flat rate VAT scheme where you can claim back a % depending on your type of industry. The flat rate scheme is very simple to do, all it is based on is what you invoice to your client and depending on the industry you get a % back - likely enough to pay for a few weeks holiday a year.

So filling in the quarterly return all you worry about is what you have invoiced - no reicepts need to be added up or anything.

Not only that you can go full VAT system anytime you want, the only thing is you can't go back on the flat rate system for a year after leaving it.

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With the car/van you only need to work out a percentage that you use it generally for personal use. Mine is charged out at 75% but it is actually mainly used for work purposes hence the high %.

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As far as the accountants goes - choose a accountant that is fully insured for the work he carries out. You can get one for £300 these days for a single self employed person not earning too much. What this means is that you are covered for his mistakes (as long as you make sure you give him all the paper work).

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