Past the 1 yeah woowoo

[tezza1234]

Just thought id sahre, I went self employed in June 2012 so have just past the 1st full year trading woop woop.

My first self assessment is due online by end Jaunuary 2014 or paper by end december 2013 i think.

Is it really as easy as costs-sales=difference when it comes to doing the book keeping. Also i have been paying the £2 something a week in national insurance, but my net profit is well below 5k, can i claim back what i have already paid in NI while ive been self employed.

 

Thanks

[taxhelper]

paper by end december 2013 i think.

Not December. It's 31st October if you file on paper.

 

Is it really as easy as costs-sales=difference when it comes to doing the book keeping.

No. You would be wise to get some professional advice to set you on the right track even if you do things yourself later on.

 

Also i have been paying the £2 something a week in national insurance, but my net profit is well below 5k, can i claim back what i have already paid in NI while ive been self employed.

Maybe.

 

As your income is low you may be thinking of the NI "Small Earnings Exception" (SEE).

 

Look here for basic advice on how NI works ....

 

http://www.litrg.org.uk/low-income-workers/self-employed/checking-your-national-insurance-contributions-nic

 

The SEE is under the section about Class 2 NI payments.

 

For a refund you should write to HMRC confirming:

 

your National Insurance number

you want a refund because you had low earnings

the tax year the refund is for

your earnings - eg, a copy of your accounts for the tax year

 

To have qualified for the low earnings exemption your earnings must be below £5,315 for the 2011/12 tax year or £5,595 for the 2012/13.

 

To get a refund for the 2011/12 tax year the deadline was 31st January 2013.

 

For the 2012/13 tax year it’s 31st January 2014.

 

HM Revenue & Customs

National Insurance Contributions Office

Self Employment Services

Benton Park View

Newcastle upon Tyne

NE98 1ZZ

 

Self-employed helpline.......0845 915 4655

[Mon to Fri 8.30am to 5.00pm]

 

Good luck.

[King_Prawn]

`Just thought id sahre, I went self employed in June 2012 so have just past the

1st full year trading woop woop.

My first self assessment is due online by

end Jaunuary 2014 or paper by end december 2013 i think.

 

You need to file you self assessment tax return by 31st October 2013 if by paper or 31st January 2014, if online.

 

Is it really as easy as costs-sales=difference when it comes to doing the book

keeping.

 

No, it is not as easy as that.

 

For example, how are you claiming travel,especially for use of your private vehicle? If your income is lower than the VAT Registration Threshold (i.e. £79,000) then you have the choice of two ways of doing it:-

 

Method A - You can claim the business percentage of the vehicle running costs (i.e. fuel, repairs, tax and insurance). Plus you can claim a capital allowance on the vehicle based on the market value of the vehicle when the trade commenced (which you can get from Glasses Guide) although you would have to deduct a percentage for private use;

 

Method B - You can claim mileage allowance. You would get 45p per business mile for the first 10,000 miles and 25p per mile thereafter.

 

Method B tends to produce the best result but you would need to have kept mileage records to make the claim.

 

There are other expenses you can claim which you may not be aware of. I would consult an accountant if I was you.

 

 

Also i have been paying the £2 something a week in national insurance, but my

net profit is well below 5k, can i claim back what i have already paid in NI

while ive been self employed.

 

Thanks

 

You can reclaim the Class 2 National Insurance. But remember it counts towards your entitlement to State benefits and pensions so I it may be advisable not to make the claim.

[tezza1234]

You need to file you self assessment tax return by 31st October 2013 if by paper or 31st January 2014, if online.

 

 

 

No, it is not as easy as that.

 

For example, how are you claiming travel,especially for use of your private vehicle? If your income is lower than the VAT Registration Threshold (i.e. £79,000) then you have the choice of two ways of doing it:-

 

Method A - You can claim the business percentage of the vehicle running costs (i.e. fuel, repairs, tax and insurance). Plus you can claim a capital allowance on the vehicle based on the market value of the vehicle when the trade commenced (which you can get from Glasses Guide) although you would have to deduct a percentage for private use;

 

Method B - You can claim mileage allowance. You would get 45p per business mile for the first 10,000 miles and 25p per mile thereafter.

 

Method B tends to produce the best result but you would need to have kept mileage records to make the claim.

 

There are other expenses you can claim which you may not be aware of. I would consult an accountant if I was you.

 

 

 

 

You can reclaim the Class 2 National Insurance. But remember it counts towards your entitlement to State benefits and pensions so I it may be advisable not to make the claim.

 

Thanks you for advice, With the costs- sales difference thing i was being a bit tongue in cheek, i did know there where other things i can claim back, not that it matters as ive ended the 1st trading year on a loss so no tax will be Due.

Ok another question for the mix, so between april and june 21st 2012 when i was employed as a employee i obviously earnt a regular wage and paid tax, so lets assume i earnt 18k for the year and paid tax on this £200+ a month for the months of april/may and part june (until going self employed in own business) then didnt make any more profit for the year, On tax return ultimately its going to be earnings while employed 4.5k - tax and NI (whilst employee) and £0 profit whilst self employed, should i then get a rebate on the tax and NI paid as a employee as both are below the threshold.

[King_Prawn]

Thanks you for advice, With the costs- sales difference thing i was being a bit tongue in cheek, i did know there where other things i can claim back, not that it matters as ive ended the 1st trading year on a loss so no tax will be Due.

Ok another question for the mix, so between april and june 21st 2012 when i was employed as a employee i obviously earnt a regular wage and paid tax, so lets assume i earnt 18k for the year and paid tax on this £200+ a month for the months of april/may and part june (until going self employed in own business) then didnt make any more profit for the year, On tax return ultimately its going to be earnings while employed 4.5k - tax and NI (whilst employee) and £0 profit whilst self employed, should i then get a rebate on the tax and NI paid as a employee as both are below the threshold.

 

It is important that you claim everything you can and, thereby, increase the scale of the trading loss and, therefore, the tax refund.

 

Given your earnings from employment are less than your personal allowance then you will get a refund of the PAYE suffered. However, you will not get a refund of the Employees NI you suffered as an employee.

 

The one thing you need to consider is what you should do with the losses that you made from self employment. You have a number of options:-

 

a. You can carry the losses forward and set off against future income from self employment;

b. You can set the losses off against other income in the current year and the preceding tax year (2011/12). You certainly should not use the losses against the employment income in 2012/13 because the employment income is lower than your personal allowance;

c. In the first FOUR years of trading, you can carry the losses BACK three years and set off against other income. You would carry back to the earliest year first (2009/10).

 

That is why you should consult an accountant, to ascertain what the best method of loss relief would be.

[tezza1234]

It is important that you claim everything you can and, thereby, increase the scale of the trading loss and, therefore, the tax refund.

 

Given your earnings from employment are less than your personal allowance then you will get a refund of the PAYE suffered. However, you will not get a refund of the Employees NI you suffered as an employee.

 

The one thing you need to consider is what you should do with the losses that you made from self employment. You have a number of options:-

 

a. You can carry the losses forward and set off against future income from self employment;

b. You can set the losses off against other income in the current year and the preceding tax year (2011/12). You certainly should not use the losses against the employment income in 2012/13 because the employment income is lower than your personal allowance;

c. In the first FOUR years of trading, you can carry the losses BACK three years and set off against other income. You would carry back to the earliest year first (2009/10).

 

That is why you should consult an accountant, to ascertain what the best method of loss relief would be.

 

Wo Wo Wo so what your saying is, if it turns out i ended up with a loss of say 2k i can if i choose use that 2k to come off a previous years tax bill, weather an employee or self employed, So if i was an employee and earnt 18k in 2011 i can say i earnt 16k and receive a rebate on the difference, or not...

[King_Prawn]

Wo Wo Wo so what your saying is, if it turns out i ended up with a loss of say 2k i can if i choose use that 2k to come off a previous years tax bill, weather an employee or self employed, So if i was an employee and earnt 18k in 2011 i can say i earnt 16k and receive a rebate on the difference, or not...

 

Yes, you can carry back the losses and get a tax refund. So if your trading loss was £2,000 and you decided to take the loss back to 2009/10 then:-

 

 

• if you was a basic rate taxpayer in 2009/10 then you would probably receive a refund of £400 (i.e. £2,000 x 20%);
  
• if you was a higher rate taxpayer in 2009/10 then you would probably receive a refund of £800 (i.e. £2,000 x 40%).
  

One other thing that should be mentioned is that you pay two types of tax on your self employment income - Income Tax and Class 4 national Insurance. You get loss relief for both. So if you carried back the trading loss and set it off against income tax on employment income, those same trading losses can be carried forward and set off against future profits for Class 4 NI purposes.

[tezza1234]

Yes, you can carry back the losses and get a tax refund. So if your trading loss was £2,000 and you decided to take the loss back to 2009/10 then:-

 

 

• if you was a basic rate taxpayer in 2009/10 then you would probably receive a refund of £400 (i.e. £2,000 x 20%);
  
• if you was a higher rate taxpayer in 2009/10 then you would probably receive a refund of £800 (i.e. £2,000 x 40%).
  

One other thing that should be mentioned is that you pay two types of tax on your self employment income - Income Tax and Class 4 national Insurance. You get loss relief for both. So if you carried back the trading loss and set it off against income tax on employment income, those same trading losses can be carried forward and set off against future profits for Class 4 NI purposes.

 

That is really really interesting, thank you so much for advice

Are you a accountant?

[King_Prawn]

Yes, I am an accountant.

[tezza1234]

Yes, I am an accountant.

King-Prawn you are wonderful, also where are you based

And how much do accountants charge as oppossed to the saving i may/hope i make, cold hard cash is hard to come by

[King_Prawn]

I am based in Essex. I reckon you could get an accountant for £200. Plus if you get a refund you could make the refund go to the accountant so that they deduct their fees before passing the remainder on to you.