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OK I am not totally confused...

(13 Posts)
Tee2072 Sat 18-Jun-11 08:20:00

I know I should hire an accountant and I am working on finding the money to do that, but meanwhile I have totally confused myself as to whether or not I owe any taxes in January. I've just finished my first year as self-employed.

So the class I took on Expenses included a sheet with how to estimate your tax. It says '£1 - £20k at 20%'.

And yet I have just seen on the HMRC website that there is a personal allowance of £7,000k+.

So do I owe taxes on the £4,000k I made this year or do I not?!?!

Tee2072 Sat 18-Jun-11 08:21:07

Sorry, title should say 'OK I am now totally confused'.

Too early in the morning!!

jimswifein1964 Sat 18-Jun-11 08:24:33

I thought it was the first £5135 you didnt pay on? there must be a box to fill in for the nontax bit surely?

jimswifein1964 Sat 18-Jun-11 08:26:05

Also, how come you might owe tax in jan? doesnt it go april to april? <clueless>

Tee2072 Sat 18-Jun-11 08:32:56

You pay the following January for the past year's income.

So the tax year went April 2010 - April 2011 and the tax is due January 2012.

And It says £7k and change on the HMRC website.

Watersign76 Sat 18-Jun-11 08:41:21

My understanding is that you can earn the £7K and you pay tax on your profits, so it is unlikely you'll be paying any this year. Have you earnt elsewhere under PAYE etc? That is when it gets complicated.

You don't have to do the return in January, you can do it before then if you want to get it out of the way. If you want to return paper docs instead of online you need to do before 31 Oct.

www.hmrc.gov.uk/demo/ - there seems to be an online demo you can watch, might help?

Tee2072 Sat 18-Jun-11 08:47:22

Thanks Watersign. No, that's all of the income I've made this tax year.

I was told by an accounting friend (whose brain I am trying to pick grin) to not do them early as it almost guarantees an audit. grin

And I'm also still trying to understand Capital Expenditure.

I've been trying to take HMRC's Self Assessment class but they've yet to offer it when I can actually go!

mranchovy Sat 18-Jun-11 11:37:56

An accountant may cost less than you think, but with income this low (below the threshold where you pay tax) it is not really necessary EXCEPT if you have bought significant capital items (eg tools, a computer) when they may be able to save you tax in later years.

Are you registered as self employed and paying Class 2 National Insurance? If not, read this.

The personal allowance for 2010/11 was £6,475 but as a self-employed person you also pay Class 4 National Insurance on profit over £5,715. If your profit is only £4,000 you are under this, and if it is £4,000k you can probably afford an accountant!

So as long as you have not included any expenses which you shouldn't have, you will be OK. How much was your total income before expenses? Your comment about Capital Expenditure is a bit worrying.

Finally, don't listen to any rumours about selection for inquiry, submit the return on line as soon as you are believe it is right. You can always resubmit later if you do find an accountant (before the end of January).

mollymole Sat 18-Jun-11 11:54:13

from your post it is obvious you DO need to see an accountant AND NOT YOUR FRIEND as they are talking total crap
by capital expenditure I take it you mean capital allowances - if you do not know the difference between repairs & renewals and capital expenditure then it is almost certain that your profit figures are wrong

Tee2072 Sat 18-Jun-11 12:02:24

Ok I haven't actually spoken to my friend yet, who happens to be a Director of Finance, so I'm pretty sure ge knows what he's doing.

Honestly, a simple question in this topic and the hell beaten out of you just because you dont understand something.

Thank you to those who are geninuely trying to help and go away to the assholez yelling at me.

TalkinPeace2 Sat 18-Jun-11 17:58:58

Tee
Do not bet on a "director of finance" knowing anything at all about self employment
Have a read through this
members.ebay.co.uk/ws/eBayISAPI.dll?ViewUserPage&userid=talkinpeace
I wrote it for ebayers but the links and information hold true for all small businesses
(highlighters and coffee are often recommended)

Tee2072 Sat 18-Jun-11 18:28:38

hmm

He also used to be self employed.

Ya know, I'm done with this conversation.

So much for advice from MN.

mollymole Sun 19-Jun-11 18:59:36

The advice given to you on MN was good advice - see an ACCOUNTANT - look and learn from the HMRC website
what did you want to be told - go your own way and see how it turns out ?

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