Read some info on these queries in earlier posts but need specific help please.
Just passed ICB L3C exam so now have complete set up to Level 3. Have upgraded membership from student to MICB CB.Dip and today received paperwork from ICB to apply for Practice Licence, etc to (at long last) start up my sole trader bookkeeping business.
My first problem is when to set business start date. I had wanted to make it 1 July 2010 as I started to incur study costs from 15 July 2010 and I want to offset these against first year's income. Trouble is I haven't yet registered my new self-employed business with HMRC as wanted to pass exams first. If I register now with start 1 Jul, will I get norped the £100 late reg'n fee? Can I register a later start date (eg 1 Nov 2010) and still apply costs incurred from 15 July to date (about £1000 in all for membership, exam fees, past exam papers, study books, etc) against income in first year of trading?
Other problem is how much PII cover to get. In a previous post, a member (Kris) said had cover costing £47.25, which is £50k cover on £5k turnover, the minimum cover Trafalgar do, I think. I'm not confident of exceeding £5k in first year, so is £50k cover alright for PII? (I can't stop thinking about the £xM cover needed for PLI). I assume in the unlikely event things go better than exepected, I can amend cover part way through the year (if so at what penalty cost?) - if you see this James, can you give me ICB perspective on this?
I also intend to register with NICO for Small Earnings Exemption from NI contribs on basis net profit won't exceed £5075.
Have just Googled "pre trading expenses HMRC" and got the official lowdown, ie post them as incurred on first day of trading, so I will register start date as 1 Nov 2010.
Re PII cover, have now had chance to properly read Admiral's terms and conditions. If turnover increases so y/e estimate is marginally above original estimate, no need to do anything but if is significant, need to tell Admiral - even then is possible no additional premium will be payable. Think I'll start with £50k cover and review after first year.
Dont want to rain on your sunny day but you cant claim the course work and pre trading, training costs. Its one of those chicken and egg things, without the initial training you can't start trading, therefore costs incured that are necessary for you to be able to start trading are not classed as business expenses. You can only claim training cost for courses etc. after you are trading, as CPD, which are necessary for you to continue trading, or which allow you to improve services you offer to clients.
I got stung by paying for the full Ideal Schools ICB package up front. In hind sight I should have done the minimum to allow me to start trading, then carried on with the other levels and qualifications, seperately, thus allowing me to claim them as CPD.
The other thing to consider is, if asked, to be realistic with your turnover as this can have make a huge difference on the premium. In my first year I kidded myself and overstated my turnover. In my second year I was more realistic and it more than halved my premium (with Trafalga).
50K is the minimum amount of cover required by ICB and 5K - 10K turnover is realistic
Thanks Bill, good info just in the nick of time as I will be registering with HMRC tomorrow.
Well that's Plan A totally
What about plan B - I register my start date as 1 July as originally intended and then include the costs as CPD? Tax relief at 20% on £600 = £120, offset against £100 penalty for late registration = £20 in my pocket, no? I suppose it's not worth getting off to a bad start with the taxman for £20, also he might get a bit suspicious at the lack of income aswell.
Re PII, I honestly think my t/o will not exceed £5k in year 1 so I'll stick with that and £50k cover.
Phil don't forget you can claim your ICB membership, as it is listed with HMRC as a recognised professional body. (Couple of years ago it wasn't). It all helps
I started trading in September but made my accounting year 6th April and apportioned everything accordingly fro the first year. it simplifies things when it comes to doing your return.
