Ok, So a while ago sometime last yr, I posted on this forum asking if it was possible to claim milage for a self employed courier to a destination and back to base..
The answers seemed to be that yes he can claim mileage for both..
My other question is what if his tax liability turns to a repayment position wouldn't this be flagged to HMRC as being incorrect and spark an investigation?
Using milage there and back, he would have a profit for the yr of £4k, less the standard PA for £8105, wouldn't that give him a repayment of tax of £3k something??
Thats a worrying question that I'm thinking that I must have totally misunderstood (If I have others will also).
The personal allowance means that the person can earn £8105 (£9440 this year) before paying tax. It does not mean that if they do not earn £8105 they get the difference back again!
All that the p.a. can do is reduce the liability to zero.
If the p.a. is not used then it is wasted.
Maybe you missed part of the question out or some figures???
__________________
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 actually thought that when I clicked submit, I released that a pa can not turn a profit into a loss- Doh!!
BTW its not a question scenario, its real life- helping out my dad..
So by the sounds of it them he could claim both ways milage and have a zero tax bill?? does that sound correct to you shaun.. also if you had to justify it to HMRC, what would you say?
Yes, with the information that you have posted that sounds fine (have to put my get out of jail free card in there as I'm not privy to all of the facts).
All costs legitimately incurred wholly neccessarily and exclusively for the purpose of the business are allowable.
Your calculation is that after expenses the business made a £4k profit which being under the personal allowance means that no tax is payable.
I assume that you have already looked at your fathers class 2 and class 4 NI situation (you won't pay class 4 on that profit but class 2 is based on turnover, not profit).
For the tax there is nothing to explain to the revenue, the figures say it all.
Any business that is capable of making a profit even if that is not taxable profit is a legitimate business.
Just put the truth into the self assessment return and even if HMRC do talk to you about it everything is legimate and documented.
HTH,
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.
