Self employed, business expenses/receipts

[ScottG13]

I am going to do some tiling jobs for friends and family soon. This will be before I register myself as self employed. When self employed you keep all receipts of business expenses, tools etc. What about tools etc I buy before becoming SE?

[merlecollins]

You will have to confirm a date to the HMRC when you started as self employed - you will only be able to use receipts on and after this date in your accuonts.

[grumpygrouter]

They can still be entered into your business as capital introduced. Just keep hold of your receipts/invoices in case the tax man wants to see them.

[merlecollins]

Do you know what the timeline is Grumpy, that the HMRC will allow this capital introduction?

[CDS]

You will have to confirm a date to the HMRC when you started as self employed - you will only be able to use receipts on and after this date in your accuonts.

From memory you have to register within 3 months of going self employed (but I'd check that to be certain). When I started out I purchased numerous tools and other bit's and bobs whilst still under my old employment - Accountant had no problems with that providing I could provide all receipts - and it was business related!

[merlecollins]

From memory you have to register within 3 months of going self employed (but I'd check that to be certain). When I started out I purchased numerous tools and other bit's and bobs whilst still under my old employment - Accountant had no problems with that providing I could provide all receipts - and it was business related!

How long did the receipts for these tools date back CDS?

[CDS]

How long did the receipts for these tools date back CDS?

Wasn't a silly amount of time - No more than 2 months before my start up date- maybe only 6 weeks?

[merlecollins]

Wasn't a silly amount of time - No more than 2 months before my start up date- maybe only 6 weeks?

Thought so, you'll probably not have long of a timeline from the HMRC to be able to include items as Capital Introduction - something like 3 months - but I'm sure Grumpy will be able to tell you

[grumpygrouter]

There is no specific time limit though if the tools and equipment are not especially "new" then it is normal practice to enter them into the accounts at "market value" at that point in time.

[grumpygrouter]

From memory you have to register within 3 months of going self employed (but I'd check that to be certain). When I started out I purchased numerous tools and other bit's and bobs whilst still under my old employment - Accountant had no problems with that providing I could provide all receipts - and it was business related!

That is correct, you must , by law register as self employed within 3 months of commencement of trading.

[mikethetile]

You will have to confirm a date to the HMRC when you started as self employed - you will only be able to use receipts on and after this date in your accuonts.

not true

you can claim for capitol expenses going back 6 yrs

so if you bring tools into the business that you bought some time ago you can claim against your tax liability

training courses and the expenses connected to it can be claimed as it was a nesecsity in setting up your business

all marketing and setup costs prior to start up can also be claimed

you do need to inform the tax office within three months of set up that you are trading as self employed

if they have to come after you they will scrutinise everything

keep all reciepts and keep books

you will be amazed at what can fall into

ppe and marketing

you dont get the full cost back, its a set off against your tax

computers are a 100% write down in a tax year so you can claim the full cost of a business only computer

[TheWrightTiler]

as far as im aware the cost of a course to be undertaken cant be offset against tax, this is cos u cannot gain a new skill or upskill at the taxmans expense, they will however pay for the cost of an additional course, ie sparky going from part 2 to 17th edition as its a neccessary qualification, best bet is to ask tax man, some peeps simply add the course cost into the final accounts if they have to do the short self assessment, if big assessment then all is itemised.

if you start say on 1st march 2010 then you have 3 mnths to tell taxman your start date, anything bought or intended for business use can be claimed from this date, for things purchased prior to start date then only the current market value can be claimed.

example

i bought A satnav for 200 in sept, i went self employed in dec, by the time dec came sat nav was 150, divide 150 by 12 then multiply by the remaining months to get the actual cost you can claim back i got 9mths worth back

as for going back 6 years then if i bought a pc 6 years ago costing a grand and a half the same pc would be worthless at todays rate

capitol expenses are 50 grand a year on a pro rata basis, if you start in april and end in april you can spend upto 50 grand, if you start in sept then its 25grand

andy

[the chippy]

Look on the directGov web site, contact them as they run a workshop for starting self employment you will get to know everything you need to know regarding Tax etc.
Ive been on one last year well worth it mate.
They also run a workshop on how to fill your self assessment in.

Good Luck

[whitebeam]

Could allways have a chat with an account

[merlecollins]

not true

you can claim for capitol expenses going back 6 yrs

Keep up Mike mate, we were trying to ascertain timing of older dated invoices after I made that statement.....

[faithhealer]

Important thing is though, you MUST register as self employed. Was on a jury once for an old fella who didn't. He wasn't a crook, just not very business savvy. Because he didn't earn anything taxable for a couple of years he thought he wasn't breaking the law. After five years the tax man made him pay back 17,000 (way over the odds even though he was earning money by then) then prosecuted anyway!
A decent accountant wouldnt have allowed him to pay anything like that so I always say use an accountant, they pay for themselves

[lcjohno]

as stated, get an accountant! Might cost you a little bit of money but generally they will save you money, plus if the tax man comes knocking you know your straight

[mikethetile]

i know its 6 years becouse i was interviewed by the taxman

i closed my business down during the divorcs as my ex went after 50% of it

my solicitor advised me to stop trading as i was sole trader , i was the business

50 % of nothing is nothing

when i moved i restarted

when i ceased trading i was hit with a £6000 odd tax bill which i paid

when i put my first return in for the new business i was called in

they had the returns for the old business and the new

i was in there for hours while they scrutinised everything

there was a spate of businesses ceasing and then restarting owing people thousands

if you run a business incompetantly or dishonestly they can have the power to stop you trading and can prosecute you

they accepted my reasons for ceasing trading and restarting

they sort of accepted my argument that i had repaid capitol allowances and so the tools were mine to reintroduce to the new business

anything purchased over 6 yrs previously wasnt allowed

evreything else was adjusted down to its market value

i wasnt prosecuted as i had paid the tax bill on the previous business

the goverment is encouraging personal development and wants to be seen to do so

so if you attend a training course with the intention of starting a new business and that training is essential to that business you can claim as you are in startup prior to starting trading