I am relatively new to book keeping and at the moment just do my husbands books for him, i was looking for some help with some tax questions for business expenses.
We are not VAT registered yet and my husband is in a partnership.
Firstly we have gotten Yell.com to build a website for us it was £180 to build and £24 + VAT per month going forward - not sure if i put build expense under Annual Investment Allowance or just normal expense as we plan to have website for the forseeable future. I take it i put monthly expense under office expenses? (I bundle most things in office expenses eg. postage, ink cartridges, stationery, telephone etc)
The website can be either an intangible asset or just expense. Monthly payment of £28.80 is an expense of the business.
2nd - my husband and his partner both wear a logo'd uniform with our logo - can i claim for washing their uniforms - looked it up on HMRC and it just states for employees who are provided with a uniform they can claim about £120 a year for manual jobs - not sure if i can claim for self-employed?
Claimable expense
3rd - can we claim buying gifts for people - i had heard that, say i do my husbands books for free but he wishes to buy me flowers as a thank you gift for the work i do, we can claim up to £25 as gifts? if so are you limited to how many times you do it?
Not allowable. Not incurred wholly and necessarily for the purpose of the business.
4th - can we claim for business lunches? i think its a big no no but on looking at forums online people still seem to be doing it? my husband will take clients out for lunch for example to try to get more work from them and we pay - can we claim and is there limits?
Not Allowable although there are some quite specific rules around this so better to break this one out as a seperate question for a fuller answer with pointers to similar questions on the site.
5th (ok maybe more than a couple of questions!) we made a loss on the business last year - can i put that against this years tax - and what to i state the expense as if i can - i take it there is a bit on tax return for previous years loss?
You state that you made a loss on the previous year. Was that return prepared by an accountant? Are you sure of your brought forwards figures?
With regards to myself carrying out the book keeping can they pay me under £100 per week for book keeping and i dont have to declare it or that i am an employee of theirs - i just make up an invoice for about £50 per week max and put it under wages is that ok?
You are providing a legitimate service to the business and should be paid for such either as an employee (so you would need to be on PAYE) or on a self employed basis (Invoice client and payment received gross from which you run your business including payment of your own salary and expenses. You would need MLR cover either from HMRC or your professional body.
There is no such thing as not having to declare income or any acceptable excuse for underdeclaring income and either of those will get you in a lot of hot water.
Any other advise you can give us would be greatly appreciated!! Think i do most things like mileage, claiming gas electric for room as office, etc but i might be missing other things!
You need MLR cover from HMRC or your professional body.
The current use of home rate is £3 per week.
Remember that depreciation is not a tax concept.
Every payment in cash, goods or services from the business to you must be justified and properly declared.
Many thanks in advance
-- Edited by Shamus on Thursday 7th of June 2012 04:55:51 PM
__________________
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 am relatively new to book keeping and at the moment just do my husbands books for him, i was looking for some help with some tax questions for business expenses.
We are not VAT registered yet and my husband is in a partnership.
Firstly we have gotten Yell.com to build a website for us it was £180 to build and £24 + VAT per month going forward - not sure if i put build expense under Annual Investment Allowance or just normal expense as we plan to have website for the forseeable future. I take it i put monthly expense under office expenses? (I bundle most things in office expenses eg. postage, ink cartridges, stationery, telephone etc)
2nd - my husband and his partner both wear a logo'd uniform with our logo - can i claim for washing their uniforms - looked it up on HMRC and it just states for employees who are provided with a uniform they can claim about £120 a year for manual jobs - not sure if i can claim for self-employed?
3rd - can we claim buying gifts for people - i had heard that, say i do my husbands books for free but he wishes to buy me flowers as a thank you gift for the work i do, we can claim up to £25 as gifts? if so are you limited to how many times you do it?
4th - can we claim for business lunches? i think its a big no no but on looking at forums online people still seem to be doing it? my husband will take clients out for lunch for example to try to get more work from them and we pay - can we claim and is there limits?
5th (ok maybe more than a couple of questions!) we made a loss on the business last year - can i put that against this years tax - and what to i state the expense as if i can - i take it there is a bit on tax return for previous years loss?
With regards to myself carrying out the book keeping can they pay me under £100 per week for book keeping and i dont have to declare it or that i am an employee of theirs - i just make up an invoice for about £50 per week max and put it under wages is that ok?
Any other advise you can give us would be greatly appreciated!! Think i do most things like mileage, claiming gas electric for room as office, etc but i might be missing other things!
thanks so much for the reply - i have just completed my PDA so in the process of getting MLR and registering as self employed as i will be doing more than my husbands books (hopefully!)- i was carrying them out for free up until now but on speaking to some other people they suggested keeping under £107 per week, from now on, so i could just invoice him, i think they meant not to declare the income i.e i would not need to be put through PAYE if under £107 per week, thanks again!
what they meant was that you would not pay Tax and N.I. below the theshold however that is quite different to the money being invisible.
At the period end you will declare your income for the period on your P14/P60 and any benefits on your P11D (note that mileage payments within the allowable bands (45p/25p) is not a benefit).
This will also all have to tie in to your self assessment that you will now need to file.
If you are self employed rather than going down the incorporation route you are going to need to pay class 4 N.I. contributions or be exempted from them (see form CA72B).
The key is that everything that you receieve you must tell to HMRC even if you don't actually owe anything on that income.
__________________
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.
If you are self employed rather than going down the incorporation route you are going to need to pay class 4 N.I. contributions or be exempted from them (see form CA72B)
Hi Shaun, Don't you mean Class 2 NI contributions?
Although the hubby is incorporated the wife is self employed so class 4 comes into play once she makes enough money... Which of course doesn't seem likely in the short term but the form is applicable for both class 2 and class 4.
kind regards,
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.
Sorry Shaun, perhaps I was being a little pedantic...lol You said she would "need" to pay Class 4, but that only comes into play as you said when/if she makes a profit.
I am relatively new to book keeping and at the moment just do my husbands books for him, i was looking for some help with some tax questions for business expenses.
We are not VAT registered yet and my husband is in a partnership.
Firstly we have gotten Yell.com to build a website for us it was £180 to build and £24 + VAT per month going forward - not sure if i put build expense under Annual Investment Allowance or just normal expense as we plan to have website for the forseeable future. I take it i put monthly expense under office expenses? (I bundle most things in office expenses eg. postage, ink cartridges, stationery, telephone etc)
Agree with what Shamus said.
2nd - my husband and his partner both wear a logo'd uniform with our logo - can i claim for washing their uniforms - looked it up on HMRC and it just states for employees who are provided with a uniform they can claim about £120 a year for manual jobs - not sure if i can claim for self-employed?
It is a claimable expenses.
3rd - can we claim buying gifts for people - i had heard that, say i do my husbands books for free but he wishes to buy me flowers as a thank you gift for the work i do, we can claim up to £25 as gifts? if so are you limited to how many times you do it?
Depends on the gift.
If the item is normally purchased for advertising purposes and displays a 'conspicious' advert. Staff may receive such gifts, tax-free, as long as the overall cost of the articles involved do not exceed £50 per person per year. Food, drink, tobacco or vouchers are specifically excluded.
4th - can we claim for business lunches? i think its a big no no but on looking at forums online people still seem to be doing it? my husband will take clients out for lunch for example to try to get more work from them and we pay - can we claim and is there limits?
There is nothing stopping your husband claiming the cost of the lunch from the partnership (i.e. analysed as 'Entertaining'), it is just that the partnership cannot claim it as an allowable expense for income tax purposes.
Remember, you husband will have a capital/current account with the partnership. If your husband is paying business expenses privately, including entertaining, then the partnerships owes him that money.
5th (ok maybe more than a couple of questions!) we made a loss on the business last year - can i put that against this years tax - and what to i state the expense as if i can - i take it there is a bit on tax return for previous years loss?
Before I can give you advice on this point, can I ask how long the partnership has been trading?
With regards to myself carrying out the book keeping can they pay me under £100 per week for book keeping and i dont have to declare it or that i am an employee of theirs - i just make up an invoice for about £50 per week max and put it under wages is that ok?
Any other advise you can give us would be greatly appreciated!! Think i do most things like mileage, claiming gas electric for room as office, etc but i might be missing other things!
Many thanks in advance
If you are claiming for use of home as office, then as a self employed person, you husband can claim a percentage of mortgage interest (or rent), home insurance, council tax and water rates as well as gas and electricity.
Your husband and his partner can claim for both home and mobile phones as well as broadband (business use only)
Thank you so much! we have only been trading from dec 2010 so on last years tax return they had their previous employment (both worked for another company as employees) plus a small loss of just over £400 from their own partnership, they both received a tax rebate as they had paid too much tax so i was unclear as to whether this would take the business loss into account or that was just from their 'employed' part of the year and i can carry the loss forward to this year?
with regards to entertaining i cant put that against anyone or anything as a business expense? - it simply means if my husband pays for lunch for a client then the business owes him that money so in effect it would be paid back in his drawings but neither he nor the business claim it as an expense for tax purposes? is that right?
For the gifts, say we have a friend who makes up our adverts for free for us, we give her a bouquet of flowers for £25 for doing this for us with a message from mcmillan and sons is that claimable or do you mean the likes of giving her a mug with the mcmillan and sons logo on it?
