Self employed - Tax question
Discussion
http://www.employedandselfemployed.co.uk/self-empl...
Amount owed to HMRC: £1,053.96. Payment on account for 2015/16: £526.98.
Total Self Assesment due by 31st January 2016: £1,580.94.
A further payment on account due by 31st July 2016: £526.98.
Amount owed to HMRC: £1,053.96. Payment on account for 2015/16: £526.98.
Total Self Assesment due by 31st January 2016: £1,580.94.
A further payment on account due by 31st July 2016: £526.98.
Good move.
It's impossible to tell what her tax bill might be based on the information you have given.
First of all, I assume the £16,000 figure you mention is what she has billed her customers in the tax year. That is NOT what she will be taxed on.
Secondly, she can offset all legitimate business costs against this income. Business costs are costs "incurred wholly and exclusively for the purpose of the trade" (as set out in the various taxes acts)
Thirdly, she may have purchased or introduced equipment into her self employed business on which she is entitled to claim Capital Allowances - which can be up to 100% - depending on the nature of then assets purchased or introduced.
Don't forget that she doesn't just pay Income Tax on her "taxable" profits. She will also be liable to Class 4 National Insurance. This is in addition to the National Insurance she is currently paying which will be the regular monthly/quarterly Class 2.
It's impossible to tell what her tax bill might be based on the information you have given.
First of all, I assume the £16,000 figure you mention is what she has billed her customers in the tax year. That is NOT what she will be taxed on.
Secondly, she can offset all legitimate business costs against this income. Business costs are costs "incurred wholly and exclusively for the purpose of the trade" (as set out in the various taxes acts)
Thirdly, she may have purchased or introduced equipment into her self employed business on which she is entitled to claim Capital Allowances - which can be up to 100% - depending on the nature of then assets purchased or introduced.
Don't forget that she doesn't just pay Income Tax on her "taxable" profits. She will also be liable to Class 4 National Insurance. This is in addition to the National Insurance she is currently paying which will be the regular monthly/quarterly Class 2.
What about other sources of information for her business related costs i.e. -
mileage logs
bank statements
credit card statements
credit card vouchers
telephone bills
Does she run her business from home?
Does she have to pay for domestic costs?
Has she borrowed to buy any business assets - such as a car loan, or a loan to buy a piece of equipment?
Has she taken out any insurances in respect of her business?
Does she pay any subscriptions to professional or trade bodies?
mileage logs
bank statements
credit card statements
credit card vouchers
telephone bills
Does she run her business from home?
Does she have to pay for domestic costs?
Has she borrowed to buy any business assets - such as a car loan, or a loan to buy a piece of equipment?
Has she taken out any insurances in respect of her business?
Does she pay any subscriptions to professional or trade bodies?
Don't get fixated on the existence or otherwise of receipts.
How does she pay her phone bills? By bank direct debit? If so, that is evidence that will be accepted by HMRC (if they ever ask for evidence).
She is only allowed claim the business element of these phone bills. How she splits the cost between business and non-business will be down to her - but if she works it out in a reasonable manner, HMRC will not argue.
Regarding meal costs, these are allowed PROVIDED
a) they relate to her only
b) are in the nature of subsistence
Any "Entertainment" element is NOT allowed. So costs incurred paying for meals on behalf of third parties, such as customers or suppliers, are not allowed.
How does she pay her phone bills? By bank direct debit? If so, that is evidence that will be accepted by HMRC (if they ever ask for evidence).
She is only allowed claim the business element of these phone bills. How she splits the cost between business and non-business will be down to her - but if she works it out in a reasonable manner, HMRC will not argue.
Regarding meal costs, these are allowed PROVIDED
a) they relate to her only
b) are in the nature of subsistence
Any "Entertainment" element is NOT allowed. So costs incurred paying for meals on behalf of third parties, such as customers or suppliers, are not allowed.
For the OP - POA means "Payment on Account".
If the Income Tax and Class 4 NI liability for tax year 2013/14 comes to over £1,000, then the taxpayer has to pay, on 31 January 2015, the full amount of 2013/14 tax due plus a Payment on Account in respect for 2014/15. Another Payment on Account will be payable on 31 July.
So, if the liability for 2013/14 comes to (say) £2,000, the amount payable on 31 January 2015 is £2,000 re. 2013/14 plus £1,000 (1st PAO for 2014/15) making £3,000 in total.
The second POA of £1,000 for 2014/15 will be payable on 31 July 2015.
If the Income Tax and Class 4 NI liability for tax year 2013/14 comes to over £1,000, then the taxpayer has to pay, on 31 January 2015, the full amount of 2013/14 tax due plus a Payment on Account in respect for 2014/15. Another Payment on Account will be payable on 31 July.
So, if the liability for 2013/14 comes to (say) £2,000, the amount payable on 31 January 2015 is £2,000 re. 2013/14 plus £1,000 (1st PAO for 2014/15) making £3,000 in total.
The second POA of £1,000 for 2014/15 will be payable on 31 July 2015.
Gassing Station | Business | Top of Page | What's New | My Stuff