Helpful Hits - Tax and Tax Returns
Published in Issue 23, June 2013
Written by Jane from Jane Cameron
Yes, it’s the annual horror, those sleepless nights coming up to 31st January when your Tax Return is due! How can you make it easier? How do you know you’ve got it right? What resources are out there to help you?
How often should you do your accounts?
Well, the HMRC require you to do your self employed return once a year. Normally your return is due in January for the year which ended the previous April, so you have about 9 months to get it done.
However, it’s a really good idea to do your sums every month (set aside some time on the first Monday of the month, or something similar) as that way you know how your business is doing.
What information do I need?
What you’ve earned (income), and what you’ve spent (expenditure).
Having all your information in one place is a wonderful thing.
Get yourself something to keep your receipts in (even if it’s a bucket!).
Set up a folder in your emails where you can keep all your online shopping receipts, and another one for your sales.
Keep a little notebook in the car (or write your mileage in your diary).
Helpful hints:
Don’t try and do it all at once!
Some credit cards only keep the information online for three months, so download your statement every month (the .csv file format is good for reading in Excel or other spreadsheet programmes).
Do I need fancy technology?
It’s a good idea to have some sort of spreadsheet to add everything up. Basically it can have “In / Out / Date / Who to or from / What for” and that will cover most of it.
If you’re scared of spreadsheets, go on a course or look at some online tutorials. There’s Excel by Microsoft (as part of the “Office” suite), and also OpenOffice’s spreadsheet program, called Calc, which is good and free!
If you want to be fancy you can get programs like Quickbooks, which you can add all your information to and it will calculate your tax. However, these aren’t necessary at first.
What can I claim for? Can I claim a proportion of my household bills?
Equipment and supplies you use for making your lovely items (if the equipment is expensive then you may need to claim back the cost of it over several years)
Courses you go on to maintain (not improve) your standard – e.g. an annual refresher is fine but going to learn a new skill (which would subsequently increase your income) is not.
You may be able to claim a proportion of your household bills if you work from home
Here’s a link to what you can claim for: http://www.hmrc.gov.uk/manuals/bimmanual/bim47820.htm
You can’t claim for food unless associated with an overnight stay, nor can you claim for clothes unless they are really specific to your job (e.g. Kevlar gloves)
Do I need an accountant?
Not necessarily. When you’re just starting out with a small craft business your tax return should be fairly straightforward.
If you do want an accountant, shop around. Some places accountants do a monthly payment (which can be good as you know where you stand).
Online tax return
Yes, you are expected to do your tax return online. When you register for the first time your username / password may take some time to come through, so please register early enough that it will be with you in time. Keep your password somewhere safe.
Might I get money back?
If your business is making a loss and you are also working (employed) then you may get a rebate.
Can I be employed and self employed?
Yes you can. If you are doing a lot of self employed work you may have a duty to tell your employer.
I need help!
You can ring the HMRC and ask them questions. Be prepared to be on hold for a while as they can be quite busy. A useful telephone number for them is 01355 359022.
The HMRC have webinars and e-learning packages to help you, and also run courses on how to get started and fill in your tax return
This is a very useful link. http://www.hmrc.gov.uk/startingup/help-support.htm
Jane Cameron.
Please note: This introduction is no substitute for specialist advice.
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