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I have a main job, where I pay tax and NI via PAYE. I also…

I have a main job...
I have a main job, where I pay tax and NI via PAYE.

I also have a very small business, making glass beads. It's basically a hobby, but I sell my work to basically cover my costs etc. I am registered self-employed with this business with HMRC, and complete self-assessment each year. My turnover for my small business this year was less than £2000, but I do have stock in the form of glass rods & frit (raw materials), plus tools & equipment. Do I need to do a stock check? I have had conflicting advice on this - some people say that if the value of stock is under £10000 then there is no need to do it (and my stock is worth much less than this).

If I do need to do a stock check, do I count equipment & tools (which will last for more than a year), or just the raw materials? Also, how on earth do I value made up work (ie: beads made, but not yet sold), considering I haven't kept any records so far of the glass I've used to make them?
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Answered in 11 minutes by:
4/8/2013
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,231
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi

 

Thanks for your question

 

Yes you must undertake a stock take, as purchases made during the year (and any stock brought forward from 2011/2012) may not have been fully utilised during the tax year in question.

 

You do not add in tools and equipment - just the goods used to actually make the glass beads (so the glass rods and frit) as the tools and equipment will be claimed under the capital allowances rules (which I assume you have been doing which also allows a full 100% of the value of that item in the year of purchase under the listing annual investment allowances as long as less than £25,000 in total)

 

So you work out what stock you had at the end of the last tax year, and then add what you have purchased, then deduct from these two figures the stock on hand at the year end, and this gives you the true value of stock used, although some of that costs might be attribuable to spoilt beads, which is allowable. (So no not the made up beads, the goods to make the beads, the raw materials)

 

 

Thanks

 

Sam

 

 

 

 

 

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Customer reply replied 5 years ago

Thanks Sam, that makes sense.


 


My business has been open for two years and I've not done a stock take up to now (oops!). Should I just do one at the end of the tax year just gone, and carry on properly from now? I know that I'll probably end up showing a profit this year, due to not having counted the stock before now.


 


Also, do I need to include the value of beads that I've made, but not yet sold?

Hi

 

Thanks for your response

 

I would imagine then you claimed for all stock purchases in 2011/2012, so use the opening balance as NIL, add the purchases you have made, then deduct the stock on hand at 05/04/2013, then claim the amount left over. (And then make an adjustment for the beads made up and not yet sold, with a figure of what they cost to make - not the retail value you have placed as the sale price)

 

Then at the end of each 5th April do a new stock take, at which point the stock on hand at 05/04/2013, then is added to the purchases made in 2013/2014, then deduct the stock on hand (which will include the raw value of the made up beads, not yet sold) and then repeat this each year.

 

If I could trouble you to rate the level of service received (or press accept) this ensures that I am paid, and any feedback or bonus are always most welcome.

 

 

 

Thanks


Sam

 

Sam
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