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Is my business under the tax allowance?

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Is my business under the tax allowance?

Postby David Pitt » Sat Jan 05, 2013 2:13 am

Hi everyone,

its my first year in business and im wondering if i dont make enough to be taxed and stay under the tax allowance, am i still able to claim back tax relief on tools ect for past few years and all the parts iv bought and used since i started trading?
David Pitt
 
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Joined: Sat Jan 05, 2013 2:10 am

Re: Is my business under the tax allowance?

Postby Sophia Christopher » Wed Feb 06, 2013 2:57 am

Usually the cost of parts bought and used and the allowances that may be claimed for tools on hand when you started the business and overhead expenses are deducted from turnover (sales) to arrive at a net profit or net loss.

If a net profit but under available personal allowances (only one personal allowance per person) then apart from disclaiming some or all of the allowances on the tools and save them for a future year that's it - low profit, no tax to pay and no other claims to be made.

If a loss then choices include, amongst others, carrying forward against future profits and carrying back against past earnings and getting a repayment.

Don't forget that parts bought but not used are "stock" and the cost is carried forward until the part is used and it is always a good idea to "match" parts bought against the jobs done to assist in any customer queries and warranty claims as well as to satisfy the taxman should he have a look.

If you are setting out to make a success of this business you will need support from an accountant and if you have not appointed one then you should appoint one sooner rather than later. There is a danger that incorrect claims could be made, however innocently, and there is every chance that they will come back and bite. There is also a danger that you will be missing out on opportunities to make claims and benefit from planning on choosing an accounting date for example.

Hope this helps.
Sophia Christopher
 
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