Expense the bureau (£70 isn't generally worth capitalising although there are times that you might dependant upon profits).

Capitalise the Laptop.

For electronic equipment I generally use a three year write off to zero. so depreciate at £233 per year (sure that it wasn't exactly £700. Just divide whatever it was by three).

Thats taking a full years depreciation in the year of acquisition regardless which month that it was purchased. Some people depreciate using the actual months but I don't.

The depreciation and the expensed asset will reduce your profit for the year for your accounts.

Thats only paper profit.

To calculate taxable profit add the depreciation back to the profit figure.

In the tax calculation you will have 100% AIA (annual investment allowance) available however it may not always be beneficial to use that dependant upon your profit figure.

If you do not use the AIA because you want to carry forwards capital allowances then take the laptop to the general pool that is written off at 18% p.a.

At any time that the pool is less than £1k it can be moved to the small claims pool and written off completely that year.

The key is that you do not want to lose any capital allowances by overcliaming more than the profits that you have against which to set them as you will find that a gain on paying less tax this year may come to bite you when you pay more tax next.

Hope that makes sense,

Shaun.

You add back whatever the depreciation is that you have taken off (in that period through P&L). Depreciation is an accounting, not a tax concept.

In the self employment part of your self assesssment you include the AIA and / or WDA in the capital allowances section.

You do not take a wage from self employment, you take drawings against profit.

Looking at your current situation (forgetting future income, mileage and use of home as office for now) you have £2500 turnover less £450 expenses leaving £2150.

You then have a laptop of £700 which you will capitalise and depreciate.

The depreciation affects your accounting (paper) profit but is added back to the tax calculation.

Considering the number lets take the whole £700 as AIA so in the tax calc thats £2150-£700 so £1450.

You will not pay any class 4 NI on that and you need to get dispensation for your class 2 contributions (not a lot but its £140 better in your pocket than HMRC's).

£1450 @20% will be £290 but of course that doesn't take into account mileage, use of home, additional income between now and period end, other legitimate expenses, whether the expenses that you are claiming are actually allowable, etc.

Hope that makes sense,

Shaun.

p.s.1 What sort of line of business are you in? (I'm just inquisitive).

p.s.2 if you are having difficulty with this stuff it shouldn't cost you more than a couple of hundred for someone here to sort you out. If you are in the Midlands (most places North of Birmingham) and need professional help rather than free advice on here just PM me.

-- Edited by Shamus on Saturday 8th of February 2014 03:38:39 PM

Hi Sharon,

TRAITOR.... What are you doing going and playing on other forums, lol.

yes your right (one gold star and ten brownie points to Sharon for fighting her corner when everyone else was in the wrong).

The current small earnings exemption limit is £5725.

You need to fill out a CF10.

Also see CA72b and the notes to CA72b.

It won't let me cut and paste from the notes but look on the right hand side of the first page of the 72b notes under self employed with small earnings.

It states clearly that if you self employed earnings, not total earnings are less than the small earnings limit.

HTH,

Shaun.

p.s. I fear my ps's in the previous note may have freed up the thread to play with as we please.

Hi Lisa,

think that you misunderstood, it wasn't meant that way.

We are always happy to give advice to anyone and everyone for no charge on the basis that if one person asks the question then ten more will be scratching their heads in frustration but not posting.

All that I meant was if you need help from one of us to sort you out then just post and one of us will be there to solve the headaches rather than simply keep posting if this is all tieing you in knots (and tax can be an absolute nightmare even with professionals disagreeing over various treatments).

At the end of the day you are an expert at what you do and you should be spending your time making money out of that rather than worrying about depreciation and capital allowances and whether you are getting everything correct.

Think how much money you have lost by spending time learning bookkeeping / accounts / tax rather than selling? Probably quite frightening isn't it.

I was not telling you that you need to pay for advice to get good advice but rather saying that it may be better to bring one of us in to help you out (which you would need to pay for).

My appologies if the message was taken in any other way to that intended... One of the downsides about this medium that things do not always read per the original intention behind the message.

kindest regards,

Shaun.

-- Edited by Shamus on Sunday 9th of February 2014 12:26:01 PM

Hi Lisa,

Don't feel alone in that.

Some people take to it like a duck to water and other don't no matter how much money they throw at trying to learn it.

Thats why when we get newstarts on here I generally advise reading the David Cox business accounts book before they decide whether this is the career for them.

All things considered if you loved doing bookkeeping and accounts then that is the service that you would be offering... But it isn't. Its a necessity rather than something that you love and can make money from in itself.

Of course there in lies another headache in that not all bookkeepers and accountants are equal. You need someone who is able to give you sound tax advice, prepare your self assessment, keep excellent records for you and all for a low price as you've only got quite small turnover at the moment (although that will hopfully grow when you are not spending too much time on the bookkeeping).

It very much depends on the number and complexity of transactions but for a self employed person with £4k turnover I wouldn't really be expectig you to be paying more than a couple of hundred pounds a year for professional help.

The bookkeeper will need all invoices, all receipts, all bank statements and your mileage log. There would also be some money laundering checks (sounds worse than it is) and then you should be able to get the stress of your books off your shoulders and concentrate on making some money.

If you are interested in that then just post approximately where in the country you are and there will be members on here, myself included if you fall within my catchment who would be able to help you.

kindest regards,

Shaun.

p.s. when choosing a bookkeeper or accountant it is often a good idea to look at some of their previous posts on the site.

Fear not Lisa,

Any good bookkeeper or accountant would sit down with you and explain in easy to usderstand terms everything that they have done to get to the figures that they have.

They would also make sure that you are claiming everything that you should and not claiming anything that you should not.

You are a little beyond my main catchment (#1) but if you get noone suitable closer PM me and I'll see what I can do about helping you out (To PM members click their name and go down to private messaging, note though that not all site members have that option set on).

kindest regards,

Shaun.

#1 I'm in South Staffordshire and mainly service Staffordshire and the West Midlands although I have clients from Kent to Edinburgh.

Thanks for the clarification Shaun -thought I wasn't wrong ! It was the AAT website -hardly go on though as everyone seems quite 'snobby' much prefer this forum