Questions for experienced tax-returners!

My first tax return only covered two weeks business, and I made a loss, so it was a very simple affair! My first full year's tax return is throwing up some questions. I've looked through the tax forum posts and not spotted the answers, but sorry if I am repeating questions!

1. Do you have to have paper receipts? For example, for each month I have a receipt for childcare.co.uk membership in my email account, and a record of the payment on my online bank statement. I'm loathe to print out and file 12 bits of paper if I don't have to. Would it be acceptable to show a tax inspector them on a computer screen, or is it a requirement to have a hard copy?

2.When I have taken expenses accrued during the year from annual income, do I:
next subtract the percentage of heating/ lighting/ council tax/ water rates/ rent from annual income
then calculate 10% wear and tear?
finally have my net income figure?

3. I read somewhere that Chatterbox runs her tax year from 1st April - 31st March. I would like to do this to as it is really confusing me doing it from the 6th. Could I change to the 1st from the next tax year and how would I do it? Just stop this years accounts at 31st March 2014?

Thank you to anybody with the time and patience to advise! :)

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Originally Posted by lisbet

My first tax return only covered two weeks business, and I made a loss, so it was a very simple affair! My first full year's tax return is throwing up some questions. I've looked through the tax forum posts and not spotted the answers, but sorry if I am repeating questions!

1. Do you have to have paper receipts? For example, for each month I have a receipt for childcare.co.uk membership in my email account, and a record of the payment on my online bank statement. I'm loathe to print out and file 12 bits of paper if I don't have to. Would it be acceptable to show a tax inspector them on a computer screen, or is it a requirement to have a hard copy?

Will you online statements allow you to go back 7 years including your current year? Childcare.co.uk is really expensive to pay monthly too and about £65 if you take up their 50% offer and pay in one go (for information)

2.When I have taken expenses accrued during the year from annual income, do I:
next subtract the percentage of heating/ lighting/ council tax/ water rates/ rent from annual income
then calculate 10% wear and tear?
finally have my net income figure?

Income stays static - expenses are what you calculate including your percentages and wear and tear of 10% of your total income. The expenses are taken away from your income and this is your taxable amount, less you allowance which last year was £9440.00. There will be a section where it asks if you have a loss to bring forward so don't forget to put that in from last year and it will help reduce your profit further.

3. I read somewhere that Chatterbox runs her tax year from 1st April - 31st March. I would like to do this to as it is really confusing me doing it from the 6th. Could I change to the 1st from the next tax year and how would I do it? Just stop this years accounts at 31st March 2014?

I would

Thank you to anybody with the time and patience to advise! :)

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Once you get it right for the first year it is really easy thereafter. Also try and keep up to date :)

Thanks so much for your reply - especially on a Saturday afternoon!

1. Good point about how long online statements are kept for - I think it is 6yrs. I will check and ask to go back to paper statements if need be.

Thanks for the tip about childcare.co.uk fees too. :thumbsup: I'm paying £120 a year the way I'm doing it so will definitely investigate paying anually.

2. Thanks, so just to double check I've understood :blush: the order of calculation is:

Gross income minus Expenses (inc utilities) minus 10% Wear and tear = Net income

Thanks for the reminder about bringing last year's loss forward - I think I may have forgotten that in the fluster of submission!

I solemnly promise that I am DEFINITELY going to get the next tax return out of the way when my business is closed for my summer holiday! :)

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Originally Posted by lisbet

3. I read somewhere that Chatterbox runs her tax year from 1st April - 31st March. I would like to do this to as it is really confusing me doing it from the 6th. Could I change to the 1st from the next tax year and how would I do it? Just stop this years accounts at 31st March 2014?! :)

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I personally do not think it exactly matters when your year runs. It's what's best for you. My tax year begins at the start of the first full week in April, and ends on the Sunday after the last day in march. For me, split weeks are too complicated.

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Originally Posted by Chatterbox Childcare

Once you get it right for the first year it is really easy thereafter. Also try and keep up to date :)

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Hello Chatterbox
Can I just ask, do I need to deduct my allowance from my net income or is that automatically done? I'd love to get my profit reduced further. I have a tax bill of £800 this time. This is my 2nd year filing. Thanks in advance.

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Originally Posted by Tweetybird

Hello Chatterbox
Can I just ask, do I need to deduct my allowance from my net income or is that automatically done? I'd love to get my profit reduced further. I have a tax bill of £800 this time. This is my 2nd year filing. Thanks in advance.

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No you don't take your allowance off, the return will do it for you. If you want any help with your expenses feel free to pm me

Debbie

There is plenty of support here for this sort of question...however....there is a difference between book keeping and doing a tax return.
If you are ever investigated HMRC will want to see 'receipts' and a book where all the expenses are recorded.
some documents need to be kept for 3 years others for 6 (invoices need to be kept for 6 years)...make sure you know which they are.
If you claim gas and electricity you must keep the bills for 3 years...the same for the Council Tax if you claim 10%

Every year the tax system changes due to the Budget and various other matters...accountants are the best people to advise you
Some accountants do just accounts/book keeping and others are tax experts...each cm will be different because her circumstances will be different.


With all the will in the world CMs will never get to know the ins and outs of running a small business because the rules change all the time....get professional advice !

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Originally Posted by Simona

There is plenty of support here for this sort of question...however....there is a difference between book keeping and doing a tax return.
If you are ever investigated HMRC will want to see 'receipts' and a book where all the expenses are recorded.
some documents need to be kept for 3 years others for 6 (invoices need to be kept for 6 years)...make sure you know which they are.
If you claim gas and electricity you must keep the bills for 3 years...the same for the Council Tax if you claim 10%

Every year the tax system changes due to the Budget and various other matters...accountants are the best people to advise you
Some accountants do just accounts/book keeping and others are tax experts...each cm will be different because her circumstances will be different.


With all the will in the world CMs will never get to know the ins and outs of running a small business because the rules change all the time....get professional advice !

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Whilst I agree with some of the above, for tax audits you need to provide accounts for 7 years including your current year. If you don't have it then the HMRC can disallow them. My advice keep everything!

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Originally Posted by Chatterbox Childcare

Whilst I agree with some of the above, for tax audits you need to provide accounts for 7 years including your current year. If you don't have it then the HMRC can disallow them. My advice keep everything!

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I have just attended one of the most informative 'Business skills for cms' training course.

Invoices, cheque books tabs etc etc need to be kept for 6 years...so your current and the 6 previous.
Once you have filed this year you can destroy one from the 6 kept on file...etc etc....does that make sense?
If I look in by storage box there will be 6 lots plus the current one I am using ....so we agree.

Thanks Simons and chatterbox. Really interesting information. At the end of each year, I put a big elastic band around that years file and stuff it on a shelf in a cupboard. There are 12 years there so far, and room for loads more!!!!!! Maybe one day I will have a big sort out!!

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Originally Posted by k1rstie

Thanks Simons and chatterbox. Really interesting information. At the end of each year, I put a big elastic band around that years file and stuff it on a shelf in a cupboard. There are 12 years there so far, and room for loads more!!!!!! Maybe one day I will have a big sort out!!

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:-) same here .. except mine go in a huge box in loft!

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Originally Posted by loocyloo

:-) same here .. except mine go in a huge box in loft!

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Have you heard about the story of someone who retrieved their documents from the loft and found that they had been shredded...by a squirrel?
True story !