Time for the tax man

[Tom]

I have decided to do the tax myself as I havent been on the HM Revenue and Customs books to long plus it will save me a few hundred quid this time round. But next year I will get it all done professionally.

Anyway, what happens now? Do I wait for the form to come from them to fill in and send back or can i do it online now???


Not to sure what to do as this is my first time going about this. :o :(

[Vectis]

The online thing takes ages to set up - they have to send you passwords and PINs in the post, that sort of thing. If you can, I'd register now and get the wheels in motion.

If you already registered as self-employed (which I think you did a while back) then the self-cert forms will land in the post probably mid-end April.

If you're organised, you'll have all the numbers ready to plug in.

I always find it useful to use the paper version to get everything in the right place, then key it in online. But that's because I've been doing paper ones for 20+ years.

Don't forget as it's your first year of trading you can claim 40% of (most - check the rules) asset costs as depreciation - from thereonin you can only claim 25% of the residuals.

[Tom]

I have just sorted out the online Self Assesment.

Now i just need to find out on what i can claim for ect ect.


Thanks again for a speedy reply. :)

[Solitaire Events Ltd]

I have decided to do the tax myself as I havent been on the HM Revenue and Customs books to long plus it will save me a few hundred quid this time round.

It won't. False economy.


Now i just need to find out on what i can claim for ect ect.


I rest my case. ;)

Get an accountant.

[Tom]

Just to check is this the correct page im looking at - Link (http://www.hmrc.gov.uk/rates/it.htm)

[Solitaire Events Ltd]

Just to check is this the correct page im looking at - Link (http://www.hmrc.gov.uk/rates/it.htm)


Tom...



Get an accountant.

[Tom]

:lol:


If i actually had money then yeah. :lol:

[Solitaire Events Ltd]

:lol:


If i actually had money then yeah. :lol:

This is one of the most important pieces of advice that I will ever give anyone, honestly.

You will pay more money to HMRC Revenue and Customs if you don't get an accountant.

Trust me. :)

[rob1963]

In my case, it's a case of waiting for the form to arrive.

Up until a couple of years ago, it always arrived within a couple of days of the tax year ending, but since everything merged into HMRC, it's become a complete nightmare.

Last year, the form didn't arrive until almost the end of April, so if I'm lucky I might see it in about 3 weeks!

:bang: :bang: :bang:

[Tom]

I understand what you are saying. I have always had one rule for myself and that is never to borrow money from anyone and i have stuck by this for just under 10 years.

Now this comes along. No offence to anyone but there are people saying get an accountant and ther are others who say they get on well with the diy approach.

The way i thought about it was why should i have to pay £200 for example to get 10 bookings all sorted the correct way where i can do it myself for free. I know that there is a lot more invloved with it like claiming for other expenses but to be honest i have never know what these are. I have look on here and on various website and didnt find much at all.

Anyway, i guess this may have to be a ask the family moment. Im seriously not happy about it but if it has to be done then its got to be done.


:sofa:

[Solitaire Events Ltd]

I but to be honest i have never know what these are. I have look on here and on various website and didnt find much at all.



Which is why you get an accountant.

People who think they are saving money by not having one, are not and most of the time, they think they are saving money because, they know better, and they have never used an accountant.

They know the ins and the outs, the loopholes and the areas that the average person wouldn't have a clue about.

You are trying to save money by doing it yourself. You won't.

[rob1963]

I understand what you are saying. I have always had one rule for myself and that is never to borrow money from anyone and i have stuck by this for just under 10 years.

Now this comes along. No offence to anyone but there are people saying get an accountant and ther are others who say they get on well with the diy approach.

The way i thought about it was why should i have to pay £200 for example to get 10 bookings all sorted the correct way where i can do it myself for free. I know that there is a lot more invloved with it like claiming for other expenses but to be honest i have never know what these are. I have look on here and on various website and didnt find much at all.

Anyway, i guess this may have to be a ask the family moment. Im seriously not happy about it but if it has to be done then its got to be done.


:sofa:

I've never used an accountant, Tom, although I think Darren's advice is good advice, as I've often heard it said that they will save you more than they charge you for their services.

Personally, I've always done my own figures, partly because 24 years banking experience was helpful & partly because I have plenty of time & I'm always on the ball.

For example, every time I buy something, the details go straight onto one of my expenses forms, and the receipt then goes into a clip...whereas most people I know just throw the receipts into a drawer & only sort them out once every month or two.

I just couldn't work like that.

[Tom]

Which is why you get an accountant.



Ok. I just hope they are open after i finish work as i have a disco saterday so i can't go down then. I'll see what I can come up with.


For example, every time I buy something, the details go straight onto one of my expenses forms, and the receipt then goes into a clip...whereas most people I know just throw the receipts into a drawer & only sort them out once every month or two.




What ever I buy I will take copy the name of product, price, vat amount and the date and i put this on a spead sheet. I then place the receipt for the item in to the filing cabinet.

I think this is quite organised, but that my opinion on what I do.

[Solitaire Events Ltd]

For example, every time I buy something, the details go straight onto one of my expenses forms, and the receipt then goes into a clip

You must get out more Rob. :p

[rob1963]

You must get out more Rob. :p

Indeed!

:D :D :D

[Vectis]

Tom

You've taken lots of good advice from the 'elders' on this site over the last year and I've watched you grow quickly from an enthusiastic any-price wannabe to a mature forward-thinking business which cares about the service it provides and how it is presented.

Therefore I can't understand your reluctance on this one :bang:

It's a no-brainer. Accountants do this sort of thing as their bread & butter just as you turn up and play music at peoples' birthday parties as yours.

I included the comment about asset depreciation in my previous response hopefully to convince you that this is not a job for the amateur in the same way as a wedding disco is no job for some spotty 14 year old with an iPod and an old household stereo system.

An accountant WILL save you money and take advantages of allowances you weren't even aware existed.

Go for it, you won't be sorry.


Martin

[Tom]

I have had a look today, but I need to make some phone calls and get some quotes.

[spin mobile disco]

I use an accounting program. As all income and expendature has its own auto fill boxes its pretty easy to use. Just fill in outgoings, assets, income etc and it provides a report you can send straight to HMRC. Mind you , you have to fill it in whenever a purchase is made etc. Then file your receipts etc by year month etc. Im told by a friend who is an accountant that for a small business like mine it is probably cheaper in the long run. Nad if you ring HMRC they are very helpful with enquiries.

[Solitaire Events Ltd]

And I'm sure they tell you all the loopholes and money saving tips.

[rob1963]

And I'm sure they tell you all the loopholes and money saving tips.

:Laugh:

[Dillmiester]

I have had a look today, but I need to make some phone calls and get some quotes.

How did you get on?

I am now in the first business year of my now official enterprise. All relevant government agencies have been informed and im slowly listing all assets and arranging recipts.
Despite the good advice on here I do not intend to get an accountant in year 1 for the following reason;
The assets of the business comes to £3,775 based on new equipment purchased in the last 12 months and fair market value of anything else.
I understand that 22% of this or 40% in year one can be deducted from the tax on earnings. If its the 22% figure then thats £830.
As ive said before this is a hobby and so im not actively advertising so currently i have one event booked at £200 for which i will pay 22% tax £44.
As i stands i am clearly well under the level where i would need to pay anything. Even if i was to make a balls up of the self assesment form and miss any opportunites I will still be well under.

If in year two the business gets very busy then I will be seeking advice from an accountant as it will be more critical that every tax saving opportunity is accounted for. We will see how it goes.

[Solitaire Events Ltd]

Supposing there are ways of getting tax rebates and you don't realise it 'cos the revenue aren't going to be forthcoming about it?

An accountant is essential if you want to save money IMO.

[Tom]

How did you get on?



I got someone who works for HM Revenue to sort it out for me.

I did phone around and they were asking £300+ to sort it out. :eek: . Might just be my area. Now I know they could save me money but I really didnt see the point of paying that amount of money for only 7 gigs. :(

[nigelwright7557]

I have decided to do the tax myself as I havent been on the HM Revenue and Customs books to long plus it will save me a few hundred quid this time round. But next year I will get it all done professionally.

Anyway, what happens now? Do I wait for the form to come from them to fill in and send back or can i do it online now???


Not to sure what to do as this is my first time going about this. :o :(

I looked at doing it myself but was horrified by the forms to fill in and was even more horrified by the online method !

I actually run two businesses and it cost £170 to get both sets of books done.

I am very careful about getting my accounts printed out and have monthly summaries and an end of year summary to make it easy for the accountant.

In my experience a good accountant can usually save you what they cost.
I got around £400 tax back which more than paid for the accountant !

[Dillmiester]

In my case im allowed to earn £4,000 before i need to make a full tax return as I have a full time job as well. In year one I dont expect to earn anywhere near that so an accountant would not save me money as I wont be paying any further tax.
Year two may be different so I may look into getting an accountant.

[Vectis]

In my case im allowed to earn £4,000 before i need to make a full tax return as I have a full time job as well. In year one I dont expect to earn anywhere near that so an accountant would not save me money as I wont be paying any further tax.
Year two may be different so I may look into getting an accountant.


Who told you that? ALL income has to be declared no matter how little or how derived. You may have no tax liability due tovallowances expenses and exemptions but that's HMRC's call not yours. Sounds like you need some professional advice before you land yourself in a heap of trouble.

[Solitaire Events Ltd]

Sounds like you need some professional advice before you land yourself in a heap of trouble.

Exactly as I've said before and very sound advice. :)

[CRAZY K]

In my case im allowed to earn £4,000 before i need to make a full tax return as I have a full time job as well. In year one I dont expect to earn anywhere near that so an accountant would not save me money as I wont be paying any further tax.
Year two may be different so I may look into getting an accountant.

No, all Disco profits will be taxed-- as you already are on the threshold for paying tax on income--HOWEVER EARNED from all sources. i.e day job, part time job, second job, self employment.

As Rob says you can ONLY DIY if you know what your doing.

You dont currently have the knowledge.

My wife has received a letter from the Revenue saying a lot of Self Employed people are understating earnings and over stating expenses:confused:

CRAZY K

[Dillmiester]

No, all Disco profits will be taxed-- as you already are on the threshold for paying tax on income--HOWEVER EARNED from all sources. i.e day job, part time job, second job, self employment.

As Rob says you can ONLY DIY if you know what your doing.

You dont currently have the knowledge.

My wife has received a letter from the Revenue saying a lot of Self Employed people are understating earnings and over stating expenses:confused:

CRAZY K

I understand that I will still have to complete a Class 2 return but can earn four thousand and something before I will be required to pay any further tax. This is what the IR lady told me.
Tax on income can be ofset against costs at 22% i think and as my earnings will not come anywhere near my costs, there is no point in geting an accountant. How can he/she save me any money when I wont be making a profit?

Im doing this to be legal and above board and not to make money.

[theoloyla]

I understand that I will still have to complete a Class 2 return but can earn four thousand and something before I will be required to pay any further tax. This is what the IR lady told me.
Tax on income can be ofset against costs at 22% i think and as my earnings will not come anywhere near my costs, there is no point in geting an accountant. How can he/she save me any money when I wont be making a profit?

Im doing this to be legal and above board and not to make money.
Sounds like you have been misinformed or didnt understand her answer or she didnt understand your question but I agree with you it may not be worth your while getting a full blown accountant for such a small enterprise.

[Andy Westcott]

I think there's been some confusion between income tax & National Insurance.

You will be liable for tax on all your earnings, assuming your day job takes you over the personal allowance, which I'm pretty sure it would.

You can apply for a Small Earnings Exemption certificate if your earnings from self employment are under a certain amount (and you have a normal day job) - a tad over £4000, although without looking it up I'm not sure of the exact figure. You will have to ask for this though, as the tax people don't make this common knowledge - tis exempts you from having to make class 2 NI contributions.

As for an accountant - it all depends on how complicated a business you run. You may only do a handful of gigs a year, and have very clearly defined expenses & income, in which case an accountant would cost far more than he could possibly save you.

Horses for courses in the end, but do get some professional advice.

[Dillmiester]

I think there's been some confusion between income tax & National Insurance.

You will be liable for tax on all your earnings, assuming your day job takes you over the personal allowance, which I'm pretty sure it would.

You can apply for a Small Earnings Exemption certificate if your earnings from self employment are under a certain amount (and you have a normal day job) - a tad over £4000, although without looking it up I'm not sure of the exact figure. You will have to ask for this though, as the tax people don't make this common knowledge - tis exempts you from having to make class 2 NI contributions.

As for an accountant - it all depends on how complicated a business you run. You may only do a handful of gigs a year, and have very clearly defined expenses & income, in which case an accountant would cost far more than he could possibly save you.

Horses for courses in the end, but do get some professional advice.

Thankyou for your post and advice

[Dillmiester]

No, all Disco profits will be taxed-- as you already are on the threshold for paying tax on income--HOWEVER EARNED from all sources. i.e day job, part time job, second job, self employment.

As Rob says you can ONLY DIY if you know what your doing.

You dont currently have the knowledge.

My wife has received a letter from the Revenue saying a lot of Self Employed people are understating earnings and over stating expenses:confused:

CRAZY K
OK I understand that all profit will be taxed however that can then be offset against costs, equipment set up fee etc.
So far the business was registerd in June 2008. The value of the equipment new and FMV of old is £4,430.
So far this year I have one Disco booked at £200.
At this stage would you seriously pay an accountant to help save you money?

[Vectis]

OK I understand that all profit will be taxed however that can then be offset against costs, equipment set up fee etc.
So far the business was registerd in June 2008. The value of the equipment new and FMV of old is £4,430.
So far this year I have one Disco booked at £200.
At this stage would you seriously pay an accountant to help save you money?

Possibly, possibly not.

But I WOULD fill out a tax return.

Let's suppose that of your £4,430, £3000 is capital purchases (ie equipment) and £1,430 is other expenses (ie advertising, transport etc.)

In year 1 you can almost certainly claim tax relief against 40% of the £3000 and 100% of the £1430.

So assuming that you're a basic-rate taxpayer (ie earning under £36k pa) your tax relief will most likely be calculated at 22% so you'll be entitled to:

22% of 40% of £3000 = £264
22% of 100% of £1430 = £315
Total tax relief = £579

Minus

22% of your £200 earnings = £44

So £579 - £44 = £535 which you can claim back against the tax you've already paid through PAYE as part of your main employment.

There you go, I've "made" you half a grand already.


Now this £4430 of which you speak... have you included an allowance for the room you store your equipment in at home or run your business from? have you correctly charged ALL transportation costs for your gig?

At the very least, fill in a tax return and trouser the £535 (or whatever it turns out to be when you do the detailed calculations). Or see an accountant and try to double it.

Your call :beer1: :beer1:

[Dillmiester]

Possibly, possibly not.

But I WOULD fill out a tax return.

Let's suppose that of your £4,430, £3000 is capital purchases (ie equipment) and £1,430 is other expenses (ie advertising, transport etc.)

In year 1 you can almost certainly claim tax relief against 40% of the £3000 and 100% of the £1430.

So assuming that you're a basic-rate taxpayer (ie earning under £36k pa) your tax relief will most likely be calculated at 22% so you'll be entitled to:

22% of 40% of £3000 = £264
22% of 100% of £1430 = £315
Total tax relief = £579

Minus

22% of your £200 earnings = £44

So £579 - £44 = £535 which you can claim back against the tax you've already paid through PAYE as part of your main employment.

There you go, I've "made" you half a grand already.


Now this £4430 of which you speak... have you included an allowance for the room you store your equipment in at home or run your business from? have you correctly charged ALL transportation costs for your gig?

At the very least, fill in a tax return and trouser the £535 (or whatever it turns out to be when you do the detailed calculations). Or see an accountant and try to double it.

Your call :beer1: :beer1:

Good point and very well presented. If I still lived on the island I would be buying you beers!
I wasnt looking at it from the angle of making money through tax relief. For me it was more about being legal, above board and hopefully not giving Mr taxman any more of my hard earnt.
I do intend to fill out a tax return. Its along way off at the moment so i am retaining all reciepts and keeping accounts. This venture is not just about a Disco as I also have a live band which we intend to make some money from. As a result im also keeping all reciepts for drums, guitars, amps etc, so there is alot to include hence the £4430.

Who knows by the end of the business year I may have earnt more and it may just about balance out. We will see.

Thankyou for your post!

[Solitaire Events Ltd]

At this stage would you seriously pay an accountant to help save you money?

Yep.

[Dillmiester]

I love this great country we live in.
I called the Inland Revenue to register my business and within 5 days I get a letter and its a bill for £11.50p, great!
Oh the joy of starting a business...

[nigelwright7557]

I love this great country we live in.
I called the Inland Revenue to register my business and within 5 days I get a letter and its a bill for £11.50p, great!
Oh the joy of starting a business...

I got a bill for £19 so I paid it.
Then a few weeks later I got a letter back saying I had paid it in error and they sent me a cheque for £19.

[Vectis]

Are you sure that isn't a National Insurance demand? If so, as you've started a new business whose earnings are not going to exceed (I think it's...) £15k AND you have another job, you can apply for a 2-year exemption certificate.

It would have been a tick in a box on the original form you filled in with your business details, or if you did it over the phone you should have been asked if you wanted to apply for it. If you've not done this I'd give them a bell back and ask for it to happen. It's only a few quid a month but it all adds up! Oh, and NICs are NOT a business expense so don't try putting them through the books :o

[Dillmiester]

Are you sure that isn't a National Insurance demand? If so, as you've started a new business whose earnings are not going to exceed (I think it's...) £15k AND you have another job, you can apply for a 2-year exemption certificate.

It would have been a tick in a box on the original form you filled in with your business details, or if you did it over the phone you should have been asked if you wanted to apply for it. If you've not done this I'd give them a bell back and ask for it to happen. It's only a few quid a month but it all adds up! Oh, and NICs are NOT a business expense so don't try putting them through the books :o

Yes the lady on the phone said I could apply for the exemption so I said yes please but the letter still came.
Ive since filled out the exemption forms and sent them off. I called to check that I dont need to pay and they said ignor the demand so all is now well with Times Entertainments, for now at least.

[nigelwright7557]

Yes the lady on the phone said I could apply for the exemption so I said yes please but the letter still came.
Ive since filled out the exemption forms and sent them off. I called to check that I dont need to pay and they said ignor the demand so all is now well with Times Entertainments, for now at least.

The same happened to me.
So long as you dont turnover more than £4000 you dont have to pay any extra NI contributions.

[Andy Westcott]

Yep - this seems to be the norm when registering a new business - they bill you for NI pretty much automatically but will get it rebated if you are exempt, and to be exempt you need a full time job, and the taxable profit to be less than just over £4,800 for the year 08 - 09.