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TEAP007
TEAP007, Tax Preparer
Category: UK Tax
Satisfied Customers: 760
Experience:  Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years
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hi my partner is a self employed builder ,,i was just wondering

Customer Question

hi my partner is a self employed builder ,,i was just wondering if you could help me !!!!!! what things can i claim back eg tools, work mobile, work van ,car ,work clothes how do i work it out or what percentage do i take of things ,someone tould me i can claim back 25 percent of used tools is thi right ""please help!! everyone i seem to contact wants £200 just for their time xxx
Submitted: 4 years ago.
Category: UK Tax
Expert:  TEAP007 replied 4 years ago.

Hi thanksCustomerfor your question and it just shows you the value you get on this site. Please feel free to recommend it to your friends if you are pleased with the results. Can I just say from experience however that £200 wouldn't be a bad deal if you were getting somebody to do your partners accounts and submit a SA tax return to HMRC. You might also find that although it may seem expensive if they save you more than £200 in tax then you are ahead of the game so to speak.

However you have asked us here and we will try and assist although you can imagine that I could write a book about the subject.

 

Ok there are basically two types of expenses being normal revenue expenses that as long as they are wholly and exclusively laid out for the purposes of earning the profits you can deduct them from the sales to get net profits. These would be normal day to day expenses like fuel costs and van running costs, phone and replacement tools that were unlikely to last more than two years and work clothes. However if you use any of them for personal purposes you would need to apportion the business and private use and only claim a deduction for the business proportion.

 

then you come on to what is called capital expenditure like vans and cars and durable tools and equipment whuich cannot always be deducted 100% against the profits calculated above. Instead you can get allowances called capital allowances which can be used to reduce your taxable profits. see the following link which will help you in respect of this aspect . http://www.hmrc.gov.uk/sa/rec-keep-self-emp.htm

 

anyway I wish you all the best in getting your partners tax return completed and you should note that if you are sendign a paper copy it has to be in HMRC's hands by the end of this month if your partner was self employed at any time in the year to 5th April 2009. Of course he/she could always register to file the return online and the deadline would then be put back until 31st Janaury 2010. I assume that he/she has registered with HMRC as beign self employed as this needs to be done withion 3 months of becoming self employed.

 

Ok happy bedtime reading and I hope it all goes well



Edited by TEAP007 on 10/12/2009 at 5:11 PM EST
TEAP007, Tax Preparer
Category: UK Tax
Satisfied Customers: 760
Experience: Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years
TEAP007 and other UK Tax Specialists are ready to help you
Customer: replied 4 years ago.
hi thankyou for your reply,,just a quick one ive got a list of all the tools weve got so none are new do i take 25 pecent of what they were worth and put the total in the capital or normal revenue expenses? and the phone too!
Expert:  TEAP007 replied 4 years ago.
yes I am afraid that if the assets were owned by your partner prior to starting self employement then you will need to adopt a reasonable 2nd hand value for them at the date of commencement and take capital allowances at 25% where it is equipment and durable tools
Expert:  TEAP007 replied 4 years ago.

Oops sorry for 25% read 20% nowadays

 

TEAP007, Tax Preparer
Category: UK Tax
Satisfied Customers: 760
Experience: Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years
TEAP007 and other UK Tax Specialists are ready to help you
Customer: replied 4 years ago.
cheers XXXXX XXXXX get there if i need you again i will not hesitate youve been a great help and i have allready got my sa to send on line its just easier that way.i will look at were i put everything like if i bought a car this tax year and use it for looking at jobs what percentage do i take of how much i bought it for and the mobile phone which is used for work (pay as you go ) do i take all what has been payed into the phone as expensises or just a percentage with that too
Expert:  Sam replied 4 years ago.

Work clothes have never been an allowable day to day expense - unles they are safety wear, such as safety boots, hardhat, etc etc

Capital allowance have been replaced with Annual Investment allowance - which means that small business can claim 100% on costs of tools/equipment purchased up to total amount of £50,000 (the exception to this is cars which can only have 20% or 10%) If there is a residue of capital allowances to bring forward from 2007/2008 then if this is under £1000 - the full amount can be used in 2008/2009

if more than £1000 then 20% is applied

Items previously owned and brought into the business only get 20% of the value under Annual Investment allowance.

 

Cars - you claim only 20% (so van might be a consideration as 100% allowable with Annual Investment Allowance scheme) but of this 20% up to a maximum of £3000 is allowable -

Mobile phones is pay as you go - if all business than the mobile phone purchase can be claimed under Annual Investment allowance and credit top ups allowable, if private and business, then you must get the phone itemised - to split the cost between business and private, if this has not been otemised, then nothing is allowable.

 

Thanks

 

Sam

 

 



Edited by SamTax on 10/12/2009 at 6:19 PM EST
Customer: replied 4 years ago.

so if i have tools which have value up to 4,000 pounds i can claim 100 percent of them ? im new to this and never put them through feel quite ill about it our tax bill was mega and we are still trying to pay it off im trying to put everything through which i havnt in the past and someone told me i can make amends on my previous tax returns once i have done this one ,,,feel a failure ,,

Expert:  Sam replied 4 years ago.

Hi wooty4

 

Thanks for your reponse and you are not a failure - this is a huge topic and HMRC run free workshops - which might be of use to you - I have added a link here - as they will have one local to you -

 

If the tools have all been bought in 2008/2009 and cost £4000 then the full £4000 can be claimed - if these are from an earlier year then you have two choices

1) See if HMRC are agreeable to an amendment for the earlier years - but be mindful there are time limits - so write in and ask for the amendments to be made - you will be fine for 2007/2008 (period 06/04/2007 to 05/04/2008) but not for earlier tax years than this. the Annual Investment allowance scheme was brought into play for 2007/2008

2) Carry the value of tools previously owned into 2008/2009 but then 20% will be allowable.

 

If you want some help with the calculations - give me approx dates and costs and the tools purchased and I can work this out for you

 

Another tip - if you bill is huge - let me know does this relate to the period that end 05/04/2008 or 05/04/2009 - and maybe I can offer some advise how to take this forward

 

Thanks

 

Sam

 

 



Edited by SamTax on 10/12/2009 at 6:52 PM EST
Customer: replied 4 years ago.

hi well the bill is for tax ending 2008 i just dont know what to do work is slow they want us to pay 500 every two weeks and ive told them we cant afford it so now they want it all by the middle of october !!!!!!!!!madness

ive got a list of all our tools and we worked out the price when we bought them and in total it comes to £4580.00 we bought a car for £5000 early in the year and we use it for ourselfs and to look at jobs too.the van was for about 1000 ,,thankyou so much for this i feel very alone and feel like there is noone to turn to ,,sorry for putting this on you you have been very kind ,,debbie

Expert:  Sam replied 4 years ago.

HiCustomer/p>

 

Ring them again and explain that the amount that had been agreed is now unmanageable - see if you can change the amount you are paying - as HMRC would rather you pay what you can afford.

However you have 12 months from 31/10/2010 (which is 12 months from the statutory deadline of the 2008 return) to amend your 2008 return.

 

The legislation is "Section 9ZA

2.40Similarly, the taxpayer may wish to amend the information originally entered in the tax return (for example to replace a provisional figure with a final accurate amount), and to make corresponding amendments to the self assessment. The taxpayer is allowed to notify and make any such amendments at any time from sending in the return up to 12 months following the statutory filing date.

 

This means you could change the 2008 tax return to in turn reduce the bill - so I would get on and request the amendment be made - in writing as soon as possible.

 

Ok so what to amend you want the tools and car and van to be brought into play

 

If all of the tools were bought between 06/04/2007 to 05/04/2006 - then you can claim the Annual Investment allowance for them so in your letter asking for the 2008 return to be amended you want to ask for Annual Investment allowance of all the tools amounting to £4580

The car was bought for £5000 - but is used for private and business and was bought early 2009 - so this is going to come into play for the 2009 Tax return

We need to look at what business mileage and what private mileage is undertaken so I can apportion a split percentage for business use -- but for now assuming its a 50/50 split -

Cost of car 5000

AIA 20% 1000 (you can claim 50% = £500 Capital Allowance)

Value to carry forward 4000

 

For the van if this cost £1000 and used solely for business and again I will assume this is for this tax year just gone (06/04/2008 to 05/04/2009) then you can claim the full £1000

 

 

So to recap

 

1) Write to HMRC and ask them to amend the 2008 tax return to allow Annual Investment allowance of £ 4580 (again assuming all tools were purchased between 06/04/2007 and 05/04/2008) This will reduce the tax bill due that you are paying now - phone the Debt Helpline tomorrow and advise them you no claim was made for the tools and you are sending in a letter to ask if the 2008 tax return can be amended - and in meantime that the amounts being asked for are crippling you, could they be reduced to a more manageable level

 

2) File your 2009 return as soon as possible - with income and all business expenses

some you may not have thought of are - does your partner advertise/use internet for his business - (pricing jobs etc) if so we can have a play with internet charges, home telephone, advertising, actual motor expenses - has he claimed for the right amount of MOT,repairs, petrol,oil diesel etc does he pay for materials - have these been shown - does he hire equipment, try and think of all he spends on a typical job -

Make sure all receipts are kept for all business expenditure and business equipment

 

In the 2009 return claim for the 20% car under the Capital allowance box £500 and claim £1000 Annual Investment allowance for the van

 

If the figures I have worked out- or the dates do not correspond as they actually are - let me know and I will rework them for you -

 

But talk to HMRC - don't struggle and miss a payment, they would rather you pay what you can and stick to payment plan than miss and worry - and make things worse.

 

And you ask as many questions as you need - its a tough time for many in this present financial climate - and you are not putting on me - we are here to help

 

Thanks

 

Sam

 

 

 

 

 

Customer: replied 4 years ago.
thankyou so much for all your imformation wish there were more people like you!!! the tools have been bought since about 4 years ago i was told by someone that you can still claim for them but not the full price ,,is that true? the van we have had for a couple of years i put it through 2007/2008 tax return so i just have to put it through again .. think u put it through 75 percent !!!100 percent 1st year .i will ring them tomorrow to sort this bill out and write to them to ,can i do it on line or does it have to be written ,,the tax return on line is very easy to do as i did it last year we were going to get someone to do it this year but just had a few bad times ..so never got round to it but with your guidence i feel i can do it ok and i will look up a workshop around our area too just to help ..cant believe ive left it so long with out any help,thankyou sam x
Expert:  Sam replied 4 years ago.

HICustomer/p>

 

Check what you claimed for the van - for 2007/2008 - if you had 100% - then you have had the full value - if you didnt, then you are allowed 20%

For the tools - you need to establish the value at the date they are introduced - (so what you might expect to get for them - if they were sold) and you can allow 20%

Anything that is bought new for the business (not the car) you can then have 100% of

 

Do go along to the workshops - as you plan to file online - you have until 31/01/2010 - although I appreciate that any help to reduce your tax bill for 2007/2008 and the payments you are making on account is the priority here -

But the workshops are informative and you get lots of expert advice, and get to meet people, like you - that are finding all a bit confusing!

 

Good luck - and do not accept again - as you have already paid at the beginning of this thread

 

Thanks

 

Sam

 

 

 

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