Just about to start a career as a self employed joiner (sole trader) - my first experience of self employment and I was looking for some initial (basic) advice.
Any good advice on tax minimisation? I am currently paying off a car via a personal loan - can I claim on this? What else? How do I actually do this?
I recently bought a computer and I wondered if I could claim this as part of my business (for invoicing/book keeping etc) even though I purchased it before going self employed.
I am planning keeping my own books but getting an accountant for returns, advice etc. Any comments?
Any other constructive comments would be most welcome.
Yeap. Dont pay any taxes at all. Try to claim everything as non taxable and enjoy a good life with no taxes while other employed citizens fund the country through their taxes.
I have it on good authority that the less you earn, the less income tax you'll pay, so minimise your profits and Bob's your uncle.
If you use the car for business, the simplest way is to claim mileage rates: 40p per business mile for the first ten thousand such miles each year, and 25p thereafter. The alternative is that you run all the expenditure (tax, servicing, insurance, fuel, and loan interest) through the business and work out a regime for reimbursing the business for any private use. But this is pretty complicated because availability for private use is considered a benefit in kind, treated as equivalent to thousands of pounds per year of taxable income, unless the reimbursements exceed this figure.
Yes, you can, but the fact that you bought it before going into business suggests that you bought it mainly for personal use. This in turn suggests you will use it both privately and for the business, so you should think of a reasonable apportionment rate. For example, you could say that it will be used 50% for business and 50% privately. Then you can treat half the value of the computer, at the time you introduced it into the business, as capital equipment, and claim writing down allowances in the usual way as you do with your other tools and equipment.
If you are going to use an accountant, talk to her first, before deciding how to keep your books. Her bill will be higher if she has to spend time sorting out your messy data filed on tatty scraps of paper in a shoe box. If you plan to use a computerised book keeping package ask her to recommend one which is compatible with one of hers.
Ask all the above questions of your prospective accountant too.
Find an accountant/tax adviser in your area, preferably by recommendation from other sole traders that you will bump into. Recommendation is better than just picking from Yellow Pages or whatever.
Then take the accountants advice.
You will get conflicting advice in a public group such as this, some of it not good! And many do not have sufficient knowledge of Tax Law.
But what you'd need to do instead is total up all the costs (both running and capital), make sure they're all met from the business account, and also keep track of how many miles are business and how many private, and reimburse the private share to the business. This reimbursement need not actually happen, but only the business part (total cost minus private element) would be eligible to be treated as business expenditure to reduce taxable profit. You need to do your own sums, but the 40p/25p mileage rates are pretty generous and are often likely to lead to a higher notional expenditure figure, and hence a lower tax bill.
Depending on what sort[1] of "joiner" you are, you may fall under the Construction Industry Scheme (aka CIS). You may well want to get an accountant that actually understands the scheme. In particular you'll need to get a Tax Certificate otherwise anyone who employs you needs to take some tax off your bills.
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Read the above and see if you end knowing more than the accountant.
Peter
[1] If you are offering bespoke cabinet making then it probably doesn't apply, for window frames it may well do.
In article , snipped-for-privacy@hotmail.co.uk writes
You really need to speak to a Chartered Certified Accountant ASAP.
There are all sorts of issues that you will need to consider and much will depend on your personal circumstances. For example it may be advantageous to trade as a limited company, may or may not be a good idea to be VAT registered and so forth.
Most accountants give a free hour or so advice and can set you on the right track to start with.
What pisses me off is that its again people like OP who will come on to the newsgroups and start moaning about the poor quality of service they get from the govt. He recently bought a computer and wants to claim. FFS. Its the attitude that does me in, the thinking that the govt is stealing their money when they pay taxes.
Actually, I am very willing to pay taxes like I have been in my numerous years of "regular" employment. This has never been disputed. However, if I am entitled to saving some money through claiming business expenses then I see nothing wrong with this. I also have no gripe with the service I have received from the government. I do not know where you got that from.
Regarding the computer - as I will be using this mainly for work purposes (estimating, invoicing, record keeping, emailing clients etc.) then I wondered if I could offset this against my outgoings - this was all. Only in an attempt to aid my self-employment. I thought this was a simple, innocent question.
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