Simple Accounts

[Kinkell]

My accountant has retired and rather than paying someone new, I would like to do my own tax return. My turnover is below vat threshold and I am a sole trader working as a garden contractor. Any help is appreciated.

[Eric Mc]

HMRC allows small traders to prepare basic cash accounts i.e. cash in less cash out.

Also, small sole traders can show simple three line accounts i.e.

Income
Expenditure
Profit/Loss

So, technically, accounts such as this could be prepared without professional assistance.

[Kinkell]

Thanks, I used to do this before self assessment and higher turnover took hold. I've read on HMRC site that £ 14,500 personal and 1 vehicle allowance/costs before tax is payable.

[Eric Mc]

I haven't got a clue what you are talking about - and I'm an accountant.

But, who needs accountants?

[zedstar]

I'd love to know too

[Kinkell]

Eric Mc said:

I haven't got a clue what you are talking about - and I'm an accountant.

But, who needs accountants?

10k personal allowance
4.5k allowance for business vehicle
Simple

[CoolHands]

Sounds like you'll be fine

[Eric Mc]

Kinkell said:

10k personal allowance
4.5k allowance for business vehicle
Simple

What is this £4,500 allowance you are talking about for a business vehicle? Are you misunderstanding the 45p mileage claim and how it is applied?

The standard personal tax allowance is actually £10,600 now.

[Kinkell]

It's 10,000 miles@45p=4.5k flat rate rather than actual running cost of vehicle over same mileage. Hence the 14.5k allowance before tax. Now + 600, thanks.

[Johnrosk]

Download a a copy of DIY Accounting Sole Trader software. £20.00. It is in Excell format and very simple to use.

[Eric Mc]

Kinkell said:

It's 10,000 miles@45p=4.5k flat rate rather than actual running cost of vehicle over same mileage. Hence the 14.5k allowance before tax. Now + 600, thanks.

There is no such fixed "allowance".

The rule say that a trader can claim UP TO 10,000 business miles at 45p per mile and 25P per mile for all business miles over and above the 10,000.

BUT, if you only had 6,000 business miles in the year, you can only claim 6,000 @ 45p.

HMRC expects that a trader keeps supporting records showing the actual business miles carried out in the year - such as appointment notes or a work diary.

There are also clear and precise rules as to what constitutes "business miles" so a trader needs to be clear they understand what type of mileage is claimable.

Have a read of the recent tax case "Samadian V HMRC" to see where a trader - and his accountant - can come unstuck.