I'm a self employed van driver and mainly deliver pallets of stock all around the u.k for a outdoor sports company I keep records of the weekly invoices I send to them. I've told the HMRC that I'm self employed and they have said I don't have to do my self assessment until Oct 2010? (I'm keeping up to date with my national insurance payments). I'm worried that I'll have a big tax bill. I don't earn very much at the moment after paying out for my van and fuel! I have a few questions on what I can and can't claim tax back on.
First I have a new transit van which I got in October 09 and I signed a 'finance lease hire agreement' I only use this van for work only. Can I claim anything for the monthly lease payment, for servicing, tax and repairs I pay?
Also what is the deal with fuel expenses? Will I be able to claim 100% back? I have kept all fuel receipts is this enough? Would Microsoft excel spread sheet be a good idea to keep a weekly record of fuel expenses?
I also get my partner to do the invoices. Could I claim expenses for this?? Do you think I need an accountant?
The HMRC mean that your deadline for filing a paper self assessment return is the end of October. You will need to prepare your business paper work upto the 5th April.
Very briefly, what you pay tax on is your net profit after all your legitimate business expenses have been deducted from your takings.
From what you have said, you should be able to include 100% all your van expenses (Fuel, insurance, road fund licence, servicing etc) and also your lease payments (it is a lease hire, not a purchase lease)
You can claim all stationary and office supplies and hardware you use for the business (invoices, computers etc). If you pay your partner you can claim that too but you will need to clarify the employment status
This is a brief answers but give you an idea, it is a little more complicated than that but depending on how complicated your tax affairs are a good bookkeeper may be all you need.
I agree with most of what Bill says but beware the hiring spouses and other relatives as this is a revenue bugbear and they make you jump through burning hoops to prove that this is legitimate.
Seems unfair I know as so many MPs do it but that's just something to be wary of.
For the van dependent upon your level of income this year it might be better to consider using the annual investment allowance to reduce your first year tax liability.
Refer to the depreciation simplified thread for a description of AIA (My large message towards the bottom of the thread).
For leases separate out the interest element using the sum of digits method to calculate the interest apportionment. That will be taken directly to the P&L.
As a general rule of thumb I would suggest that anyone turning over more than £15k p.a. should have an accountant (make sure that they're qualified. There are a lot of cowboys out there) or bookkeeper qualified to prepare accounts.
Having good financial advice is likely to save you more than you would doing your books yourself and of course it also free's up more of your time to concentrate on the business rather than the books.
For fuel expenses you should keep a log of all miles traveled on company business and keep all fuel receipts.
best of luck with the venture Alan.
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I agree about being wary of employing partner, especially if your partner has another job, in which case you would most likely have to deduct tax.
It may be worth considering going vat registered, I assume all your clients are vat registered in which case you add vat to their bills and they claim it back and you get to claim back the vat on all those expensive fuel receipts etc. The saving here would possibly pay for a good bookkeeper (like Shaun says get a bookkeeper who can do accounts and tax returns so it won't be as expensive).
Shaun, give up the 'sum of digits' and come to the dark side!
I've been to the dark side and it's called FRS15 Tangible fixed assets!
In most cases the interest apportionment of the lease isn't actually a material expense so doing it on a straight line apportionment is fine... However, for my consistency more than clients I always go with the sum of digits so that interest is front loaded in a more realistic manner (per the requirements of FRS15).
Alan,
the above probably meant nothing at all to you which is more evidence if you needed it that employing a professional in this area is a good move.
I also agree totally with Rob on the VAT.... And that advice alone has just saved you more in a year than a bookkeeper would have cost you! (You can find Robs address on his website if you want to send the cheque now! lol).
Talk later,
Shaun.
P.S. Rob... Commission!!!!
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Yes... And no trying to fob me off with first born children!
Actually, yes. Really do love the FRS's. Can't believe that we're being sold down the river and that the entirety of the UK GAAP is going to be replaced with IFRS.
All that learning, straight out the window in 2012!
Nothing to make you love something like the knowledge that your going to lose it is there.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
