Self employment tax advice

[wookie70]

I have stumbled my way through a year and a bit of a fledging part time photography career. I have my earning recorded and mileages etc and will use one of the online services to do my tax. One of the things I am not sure about is my investments in equipment. I have spent a fair amount more than I have earned and also brought quite a bit of kit into the business. My intension was always to use the first two or three years to build experience, clients, equipment and my own skills so it was never going to be my main wage and I am in a position where I dare say you would class my business as loss making but that is only due to start up costs and the investment in equipment.

While I know I can definitely claim for equipment I would like to know the best way to do it if I have invested more than I have earned and also what about the value of kit I brought into the business. Can I use the amount paid over a few years or do I put it all in the year I bought it. Also does the tax paid on my main job interact with my self employed earnings so I have more overall income to get tax back from. Could I get tax back paid on my main wage to counter the investments I have made in my second self employed role

I am thinking about another investment and don't want to buy another bit of kit if I can't offset against tax. As it is I have probably spent around as much as I have made and I only have a couple of bits of kit left to complete the investment. I'd rather buy now than wait until next April as they will be used constantly.

[Berwickhibby]

I have stumbled my way through a year and a bit of a fledging part time photography career. I have my earning recorded and mileages etc and will use one of the online services to do my tax. One of the things I am not sure about is my investments in equipment. I have spent a fair amount more than I have earned and also brought quite a bit of kit into the business. My intension was always to use the first two or three years to build experience, clients, equipment and my own skills so it was never going to be my main wage and I am in a position where I dare say you would class my business as loss making but that is only due to start up costs and the investment in equipment.

While I know I can definitely claim for equipment I would like to know the best way to do it if I have invested more than I have earned and also what about the value of kit I brought into the business. Can I use the amount paid over a few years or do I put it all in the year I bought it. Also does the tax paid on my main job interact with my self employed earnings so I have more overall income to get tax back from. Could I get tax back paid on my main wage to counter the investments I have made in my second self employed role

I am thinking about another investment and don't want to buy another bit of kit if I can't offset against tax. As it is I have probably spent around as much as I have made and I only have a couple of bits of kit left to complete the investment. I'd rather buy now than wait until next April as they will be used constantly.

I suggest you use an accountant, you can offset your equipment against your earnings and I believe this be carried forward to the next tax year. I registered as a sole trader with HMRC and complete a self assessment annually, however there are many things you can offset that the taxman does not tell you.

[wookie70]

I suggest you use an accountant, you can offset your equipment against your earnings and I believe this be carried forward to the next tax year. I registered as a sole trader with HMRC and complete a self assessment annually, however there are many things you can offset that the taxman does not tell you.

It might come to that but it would probably cost as much as it would save. My brother was an accountant before changing roles so I will ask him if I'm struggling after this request for info.

[Onceinawhile]

Regarding the equipment you've bought, it depends.

It sounds like the equipment is a capital purchase and, as a result, is not a revenue expense.

However, it will be allowable as a capital allowance.

Here you have 2 choices: the annual investment allowance, which is at 100%, or the writing down allowance, which is 18%.

So if you were to use the 100% you would end up with a loss. This can be either be

Offset against your other income thus reducing your taxable income or

Carried forward and set against a loss of the same business in future.

If you take the Wda, there is likely to still be a profit and this will also be taxable. This will be at your highest rate.

In future you will need to look out for your profit level. This can cause class 2 and class 4 nic to be due as well.

Think that's about it.

Also, you cannot make a loss on this forever or you risk hmrc treating it as a hobby and disallowing the loss.

[lapsedhibee]

Could I get tax back paid on my main wage to counter the investments I have made in my second self employed role

If you make a legitimate loss as a self-employed photographer, yes, you should get back some of the tax you have paid as a wage slave.

[wookie70]

Thanks for the last two replies. That was my reading when I tried to find out for myself. I think I'll go for the get tax back from the wage slave idea and go with the AIA. This will be the only year it will make a loss as there won't really be any major outgoings in terms of investment as I have pretty much got all I need. The running costs are modest and more than covered by what I am bringing in so the Government will get the tax back in the long run. After 38 years of being PAYE it is a big jump for me but one I hope to make my full time employment. Thanks again

[Onceinawhile]

Thanks for the last two replies. That was my reading when I tried to find out for myself. I think I'll go for the get tax back from the wage slave idea and go with the AIA. This will be the only year it will make a loss as there won't really be any major outgoings in terms of investment as I have pretty much got all I need. The running costs are modest and more than covered by what I am bringing in so the Government will get the tax back in the long run. After 38 years of being PAYE it is a big jump for me but one I hope to make my full time employment. Thanks again

In future years, note that if your expenses are under 1,000 that you can still claim an allowance of £1000 for expense.

You cannot claim both though. It is either the allowance of 1k or the expenses.

[gbhibby]

I have stumbled my way through a year and a bit of a fledging part time photography career. I have my earning recorded and mileages etc and will use one of the online services to do my tax. One of the things I am not sure about is my investments in equipment. I have spent a fair amount more than I have earned and also brought quite a bit of kit into the business. My intension was always to use the first two or three years to build experience, clients, equipment and my own skills so it was never going to be my main wage and I am in a position where I dare say you would class my business as loss making but that is only due to start up costs and the investment in equipment.

While I know I can definitely claim for equipment I would like to know the best way to do it if I have invested more than I have earned and also what about the value of kit I brought into the business. Can I use the amount paid over a few years or do I put it all in the year I bought it. Also does the tax paid on my main job interact with my self employed earnings so I have more overall income to get tax back from. Could I get tax back paid on my main wage to counter the investments I have made in my second self employed role

I am thinking about another investment and don't want to buy another bit of kit if I can't offset against tax. As it is I have probably spent around as much as I have made and I only have a couple of bits of kit left to complete the investment. I'd rather buy now than wait until next April as they will be used constantly.
HMRC do Web sessions at various times for self employed people on different aspects so it's worthwhile keeping a look out for these. When I became self employed phoned HMRC and spoke to them. They were very helpful and did spend time on the phone answering my queries and gave information on claiming for things that did not occur to me.

[wookie70]

HMRC do Web sessions at various times for self employed people on different aspects so it's worthwhile keeping a look out for these. When I became self employed phoned HMRC and spoke to them. They were very helpful and did spend time on the phone answering my queries and gave information on claiming for things that did not occur to me.

Thanks,

I will take a look for the webinars and I think a phone call would be really useful. Cheers

[wookie70]

In future years, note that if your expenses are under 1,000 that you can still claim an allowance of £1000 for expense.

You cannot claim both though. It is either the allowance of 1k or the expenses.

Cheers, I'll keep that in mind too.