Selfemployment, tax etc

[admin]

www.adviceguide.org.uk/index/life/employment/self-employment_checklist.htm

[admin]

Tax for the self-employed person

* Guardian Unlimited
* Wednesday August 15 2001

If you have become self-employed you will need to contact your local tax office and apply for 'Schedule D' status.

The tax office will want to be satisfied that you are genuinely self-employed, which means (roughly) that no more than 80% of your income should come from a single client/customer. Your tax office will also advise you about National Insurance contributions.

Once accepted for Schedule D you will be able to set the proportion of your household costs that can be reasonably attributed to your business activities against your total earnings for your income tax calculation.

In theory if you are using a room in your house for business purposes it could attract business rates - the local valuation officer would visit the property to make the appropriate assessment.

But in practice, this is a grey area. Rating authorities have generally been guided by the principle that if the room is available for domestic purposes when not being used for work, no change need apply.

This means that for the vast majority of self-employed people, business rates should not be an issue. It will be an issue if, for example you dedicate a room to storage, so some caution is required depending on the nature of your business.

Unlike business premises, homes are exempt from capital gains tax when you come to sell them. As long as the room in which you are working is not used 'exclusively' for business this should remain the case.

Under the rules of self-assessment, your tax liability will be assessed every year and paid in two instalments, six months apart.

If your annual turnover exceeds £49,000 you will have to register for VAT: contact your local Customs and Excise office for details.

You may also register voluntarily, which may be worthwhile if your clients are mostly VAT registered and you issue only a limited number of invoices (for instance, less than 200 a year).

You can then manage your VAT records relatively simply through a software package like Quicken or Microsoft Money, and reclaim the VAT amounts you would otherwise pay on your business supplies and equipment.

You need to maintain full records of your financial affairs going back over seven years.

www.guardian.co.uk/money/2001/aug/15/careersadvice.tax

[admin]

Factsheet: Filing a tax return

* Guardian Unlimited
* Monday November 5 2007

If you are one of the 8 million or so people to whom HM Revenue & Customs (HMRC) automatically sends a self-assessment tax return each year, you are required to fill it in.

Who needs to fill in a tax return?

You will definitely have to do so if you:
· are self-employed

· earn more than £2,500 a year from letting property or land

· have any other income that can't be taxed through the pay as you earn (PAYE) system

· get money from a trust or settlement

· receive taxable income from abroad

· are a company director, a Lloyd's Name or member, or a minister of religion

HMRC will also need a completed tax return from employees or pensioners who have:
· a yearly income from savings and investments of more than £10,000 (before tax)

· a yearly income of more than £100,000 (regardless of its source)

· tax to pay that cannot be collected through PAYE

· annual claims for business expenses, such as business travel, of more than £2,500

· some entitlement to a higher personal allowance because they are over 65

Declaring gains

Anyone who has made capital gains (or losses) as a result of selling or giving away assets, such as property or shares, may also need to fill in a tax return.

This will apply if you:

· have made gains that are more than the annual exempt amount of £9,200

· have disposed of - through selling or giving away - assets that were worth more than four times the annual capital gains tax allowance. In 2007-08 this is £36,800

· want to claim an allowable capital loss, which can be used to reduce a future capital gains

Tax return deadlines

Self-assesment tax return You can either file your tax return on paper or online Self-assessment tax forms are usually sent out shortly after the end of the tax year to which they relate. The tax return relating to income and gains made in the 2007-08 tax year, for example, will go out shortly after April 5 2008.

Taxpayers who have previously filed a tax return online will simply get a reminder to file an online return rather than the full paper form and notes.

The advantage of filing a return online is that if you want the tax man to calculate your bill for you, you get longer to fill in your form: paper returns need to be filed by September 30 for HMRC to do the sums, but this is extended until December 30 for those filed online.

The rules are set to change in the 2008-09 tax year, so if you file a paper return the deadline will be October 31 2008, and if you file online the deadline will be January 31 2009.

The ultimate deadline for filing a return, and paying half of the amount owed, is January 31. The deadline for the second payment is July 31. This will remain the same in 2008-09.

If you are newly self-employed it is not enough simply to file a tax return by October 31 for the tax year in which you became self-employed. You must tell HMRC that you have started to work for yourself within three months of doing so - you face a fine of £100 if you don't. The easiest way to do this is to phone the helpline number for the newly self-employed on 08459 154515.

Information you'll need to give

The tax return doesn't ask for information on tax-free income or gains, such as interest paid on a cash Isa or the proceeds from selling your only or main home. However, you will need to give details of all taxable income and gains received or made in a particular tax year, which runs from April 6 to April 5, as well as how much tax you have already paid.

The main tax return asks for details of income from savings, investments and pensions. It also enables you to claim tax deductions, which reduce the amount of tax you pay, such as pension contributions and certain personal allowances.

In addition, you'll need to give details of other income in supplementary pages, which relate to the type of income you have. So if you are an employee with a buy-to-let property, for example, you'll have to fill in the employment pages for the earnings from your job, as well as the land and property pages for the rent you receive from letting property.

Similarly, if you have capital gains, you'll have to fill in the capital gains tax pages.

Do you need an accountant?

Accountant You can get tax advice from an accountant. Photograph: Getty Images There is no requirement to use an accountant, and you probably don't need one if your tax affairs are straightforward and you'd be happy using the free help available from HMRC to fill in your tax return.

But if your tax affairs are complex and/or you want advice on tax planning, an accountant - or other tax adviser - could be a wise move. If you can't afford to pay for an accountant or tax adviser free advice is available from tax charity Tax Aid.

Fines
If your circumstances mean you need to fill in a self-assessment form, failure to do so will result in a fine of £100 plus interest on any tax paid late. Fines and penalty interest will also be levied if you don't meet the deadlines for returning your form.

www.guardian.co.uk/money/2007/nov/05/tax

[admin]

As a rough guide an accountant will charge between £300 and £400 to prepare your tax returns for you.

You need to ask what an accounts fees are before you engage them.