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M&J WINDOW CLEANING

TAX....BOO. THE BORING BIT



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M&J WINDOW CLEANING

OK. I've started up my window cleaning and i'm now earning. The horrible bit of telling HMRC is done and now it comes down to expenses and earnings. The majority is simple, but from what Ive heard, your SET UP FEES can only be used for up to 3 years. Am I right. I have a van on HP over 5 years so I am telling myself for SELF ASSESSMENT that the value (expense ) of the van is £6354 divided by 3 = £2118 and the interest (expense) is £2041 divide by 3 = £680

 

Am I on the right track everyone, or am I miles off...……..

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Part Timer

You don't need to do a return for a year, I'd wait until you know where you're at at the end of March and then have a word with an Accountant. Years since I set up but I think you can continue to claim for your van until the contract is up. 

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High-tower

Nahh, claiming for a van doesn’t work like that. Counted as an asset. Get some advice from an accountant for sure.

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Iron Giant

Your tax year is from the date you went self-employed so 19th October 2018 to 18th October 2019, as for the van as you won't be doing many miles then you simply put through each monthly payment as an expense each month as this would be a more beneficial way to reduce your tax liability as you're a fledgling business, but as a above speak to an accountant or HMRC to be 100% certain   

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M&J WINDOW CLEANING
Your tax year is from the date you went self-employed so 19th October 2018 to 18th October 2019, as for the van as you won't be doing many miles then you simply put through each monthly payment as an expense each month as this would be a more beneficial way to reduce your tax liability as you're a fledgling business, but as a above speak to an accountant or HMRC to be 100% certain   
Great advice thankyou..I have thought of this method also like you suggest but as my direct debits each month add to just £162, I'll hit that quite easily and be tax liable quite quickly on the rest... accountant next step me think too..[emoji16] thanks again

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Iron Giant
11 minutes ago, M&J WINDOW CLEANING said:

Great advice thankyou..I have thought of this method also like you suggest but as my direct debits each month add to just £162, I'll hit that quite easily and be tax liable quite quickly on the rest... accountant next step me think too..emoji16.png thanks again

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As you are also in paid employment which I just realised I would definitely speak to an accountant to be fully aware of the tax implications based on your own situation

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Part Timer

Unless he's a Limited company his tax year ends April 6th 

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Dave Shaw
Your tax year is from the date you went self-employed so 19th October 2018 to 18th October 2019, as for the van as you won't be doing many miles then you simply put through each monthly payment as an expense each month as this would be a more beneficial way to reduce your tax liability as you're a fledgling business, but as a above speak to an accountant or HMRC to be 100% certain   

You can choose weather to do it like that or you can fall in line with the regular tax year so from Oct 19th - 5th April. It also depends on which method you choose to do your accounting. If you choose traditional accounting you will probs claim for your van as a capital allowance and if you use cash basis you can use the simplified expenses scheme. Like others have said if your not sure then best to speak to an accountant.


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Iron Giant
4 minutes ago, Part Timer said:

Unless he's a Limited company his tax year ends April 6th 

 

👍 , If he is limited he should have defo spoke to an accountant as it's not as beneficial as it used to be and my accountant advised me against as it would cost me more in accounting fees and hardly save me any more money in terms of tax liability  

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M&J WINDOW CLEANING

As you are also in paid employment which I just realised I would definitely speak to an accountant to be fully aware of the tax implications based on your own situation
Makes total sense to me [emoji3][emoji3] consider it done.. thanks again

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Dave Shaw

As you are also in paid employment which I just realised I would definitely speak to an accountant to be fully aware of the tax implications based on your own situation

That’s a certain as one will affect the other.


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P4dstar

Your tax year can end any time you like within the first 12 months of trading.

 

With regards to working PAYE somewhere while you're self employed I know what the situation entails as my wife did this in her first year of trading. Your two incomes are combined and make your net income. Your net income is your taxable income and you pay tax as you would if it was all earned in one job, so if you earn less than 11K or whatever the tax free amount is nowadays you pay no tax but you do pay class 2 NI. You pay basic rate tax on a second PAYE job as it is assumed a person with 2 jobs will normally have exceeded the tax threshold in their main job. If they don't exceed the threshold on both jobs they are entitled to a tax rebate.

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Lennie
28 minutes ago, P4dstar said:

 

Your two incomes are combined and make your net income. Your net income is your taxable income and you pay tax as you would if it was all earned in one job, 

 

Should this not read,

Your two incomes are combined to make your gross income. This is what you are taxed on or submit on your tax return.

Your net income is your take home pay after taxes and deductions. 

Your net income is then what you budget your lifestyle on, household expenses etc, or at least that’s the sensible way.

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Part Timer

You will have a tax code for your regular job, you will then have to fill out a self assessment and part of that will include your P60. Usually your regular job will take up your £11k tax allowance. You will therefore pay 20% tax on any profit from your window-cleaning business 

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P4dstar
10 hours ago, Lennie said:

 

Should this not read,

Your two incomes are combined to make your gross income. This is what you are taxed on or submit on your tax return.

Your net income is your take home pay after taxes and deductions. 

Your net income is then what you budget your lifestyle on, household expenses etc, or at least that’s the sensible way.

Probably. In my head I was thinking the figures after you have taken out the costs of running the window cleaning business.

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P4dstar

Just remember....

 

Jesus lived near the sea. He spent a lot of time fishing, preaching, and ate fish. Mohammad lived on a mountain, farmed goats and married an 8 year old...

 

And that is the difference between gross profit and net profit.

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M&J WINDOW CLEANING
Just remember....
 
Jesus lived near the sea. He spent a lot of time fishing, preaching, and ate fish. Mohammad lived on a mountain, farmed goats and married an 8 year old...
 
And that is the difference between gross profit and net profit.
Brilliant analysis [emoji16][emoji16][emoji16]

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Green Pro Clean Ltd

Becoming Ltd is beneficial for ta reasons once you are earning above £30k per annum. 

 

Regarding the van (check with accountant) if it's on HP you can claim full whack year one. If it's on lease hire then only the monthly payments.   

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Part Timer
26 minutes ago, Green Pro Clean Ltd said:

Becoming Ltd is beneficial for ta reasons once you are earning above £30k per annum. 

 

Regarding the van (check with accountant) if it's on HP you can claim full whack year one. If it's on lease hire then only the monthly payments.   

Sorry to disagree but you're not better off being Limited. As of next year you are only allowed £2k as a tax free dividend. This doesn't cover the tax free allowances you get without the Companies NI contributions. 

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Bart90
12 hours ago, P4dstar said:

Just remember....

 

Jesus lived near the sea. He spent a lot of time fishing, preaching, and ate fish. Mohammad lived on a mountain, farmed goats and married an 8 year old...

 

And that is the difference between gross profit and net profit.

And the difference between Jesus and Mohammed?  

One taught peace and love and was persecuted, the other waged war and persecuted others.......

I know which one I'd rather follow. If it's not too early everyone, Happy Christmas 😄

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Iron Giant
8 hours ago, Part Timer said:

Sorry to disagree but you're not better off being Limited. As of next year you are only allowed £2k as a tax free dividend. This doesn't cover the tax free allowances you get without the Companies NI contributions. 


My accountant told me this earlier this year and said as a sole trader it's pointless as by the time you also add up additional accounting charges it wouldn't be any more tax efficient or reduce one's tax liability. Although I think he said the changes from 5k to 2k dividend came in as of this current tax year 

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Dave Shaw

My accountant told me this earlier this year and said as a sole trader it's pointless as by the time you also add up additional accounting charges it wouldn't be any more tax efficient or reduce one's tax liability. Although I think he said the changes from 5k to 2k dividend came in as of this current tax year 

I had a meeting with an accountant earlier this year and he also said the same. There are other benefits from becoming ltd but for me in my circumstances it’s pointless. Also if I was ltd I wouldn’t be able to do my accounting by cash basis using the simplified accounting scheme.


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