Reclaiming tax back on items bought for work
Discussion
Currently on a PAYE scheme 3 days of the week and self employed the rest of the week. Now that the work is starting to come in on the self employed side I'm going to need to buy a laptop and a few other bits and pieces for my work.
What are the rules about claiming the tax back on purchases like laptops and tools that I use for work? Am I allowed to do this come tax return time?
What are the rules about claiming the tax back on purchases like laptops and tools that I use for work? Am I allowed to do this come tax return time?
You are now a sole trader and therefore you will need to produce sole trader accounts and complete and submit a self assessment tax return after the end of the current tax year (5 April 2010). You will also need to notify HMRC that you have commenced sole trading within theree months of the commencement date.
When completing your annual sole trading accounts and self assessment tax return, you will, as part of the process, make the various expense and allowance claims you are entitled to.
Regarding Capital Expenditure, small sole traders (like yourself) can claim a 100% write off of equipment, machinery and office equipment against your business profits as long as the expenditure in the year does not exceed £50,000 in total.
Motor cars are excluded from this 100% allowance.
When completing your annual sole trading accounts and self assessment tax return, you will, as part of the process, make the various expense and allowance claims you are entitled to.
Regarding Capital Expenditure, small sole traders (like yourself) can claim a 100% write off of equipment, machinery and office equipment against your business profits as long as the expenditure in the year does not exceed £50,000 in total.
Motor cars are excluded from this 100% allowance.
Eric Mc said:
You are now a sole trader and therefore you will need to produce sole trader accounts and complete and submit a self assessment tax return after the end of the current tax year (5 April 2010). You will also need to notify HMRC that you have commenced sole trading within theree months of the commencement date.
Sole trader accounts, does that basically mean showing my income and expenses in earning this income? Things like travel, equipment and duck houses 
Eric Mc said:
When completing your annual sole trading accounts and self assessment tax return, you will, as part of the process, make the various expense and allowance claims you are entitled to. Regarding Capital Expenditure, small sole traders (like yourself) can claim a 100% write off of equipment, machinery and office equipment against your business profits as long as the expenditure in the year does not exceed £50,000 in total.
So forgive my ignorance, but if I earn £1000 and spend £500 on something needed for work, I'm liable to pay tax on the remaining £500? Might be over simplifying it, but is that the gist?Eric Mc said:
Motor cars are excluded from this 100% allowance.
As ever Eric, thanks for your help!
theboyfold said:
Eric Mc said:
You are now a sole trader and therefore you will need to produce sole trader accounts and complete and submit a self assessment tax return after the end of the current tax year (5 April 2010). You will also need to notify HMRC that you have commenced sole trading within theree months of the commencement date.
Sole trader accounts, does that basically mean showing my income and expenses in earning this income? Things like travel, equipment and duck houses YES
Eric Mc said:
When completing your annual sole trading accounts and self assessment tax return, you will, as part of the process, make the various expense and allowance claims you are entitled to. Regarding Capital Expenditure, small sole traders (like yourself) can claim a 100% write off of equipment, machinery and office equipment against your business profits as long as the expenditure in the year does not exceed £50,000 in total.
So forgive my ignorance, but if I earn £1000 and spend £500 on something needed for work, I'm liable to pay tax on the remaining £500? Might be over simplifying it, but is that the gist?YES - but the only costs allowable are those incurred "wholly and exclusisevely for the purpose of the trade".
Eric Mc said:
Motor cars are excluded from this 100% allowance.
This doesn't mean that Capital Allowances aren't claimable - they just aren't as generous.
Running costs of the car in so far as they relate to the business activity, are also allowable.
As ever Eric, thanks for your help!
As above, you will be seen as freelanced.
The only tax that you will have to pay will be on your profits on your self employment as your PAYE tax will be sorted for you,.
You will also have to pay an additional 8% NIC on your profits above the (LEL) lower earnings limited, and, if into higher rate tax a further 1% NIC. Your tax free allowance will be used on your PAYE income therefore the first pound of self employed income will be taxed at 20%.
In order to register with HMRC you will be required to complete form CWF-1, this can be found here http://www.hmrc.gov.uk/forms/cwf1.pdf
The only tax that you will have to pay will be on your profits on your self employment as your PAYE tax will be sorted for you,.
You will also have to pay an additional 8% NIC on your profits above the (LEL) lower earnings limited, and, if into higher rate tax a further 1% NIC. Your tax free allowance will be used on your PAYE income therefore the first pound of self employed income will be taxed at 20%.
In order to register with HMRC you will be required to complete form CWF-1, this can be found here http://www.hmrc.gov.uk/forms/cwf1.pdf
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