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Where Taxpayers and Advisers Meet

Averaging (self-assessment, cash-based accounting)

crispy
Posts:6
Joined:Tue Jan 30, 2018 12:26 pm
Averaging (self-assessment, cash-based accounting)

Postby crispy » Sat May 12, 2018 10:49 am

Hi Forum,

Last tax year, I was employed part-time and was self-employed as a writer (gross £8,000).
This tax year, I was employed full-time and still self-employed as a writer (gross £2,000).

Because of the sharp decline in self-employed income this tax year, may I request to use 'averaging' on my self-assessment for this tax year?

I have already filed for last tax year and I use cash-based accounting.

Thanks for any help or guidance!

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Averaging (self-assessment, cash-based accounting)

Postby pawncob » Tue May 15, 2018 12:17 pm

Yes.
Details:
https://www.gov.uk/government/publications/averaging-for-creators-of-literary-or-artistic-works-hs234-self-assessment-helpsheet/hs234-averaging-for-creators-of-literary-or-artistic-works-2018
With a pinch of salt take what I say, but don't exceed your RDA

crispy
Posts:6
Joined:Tue Jan 30, 2018 12:26 pm

Re: Averaging (self-assessment, cash-based accounting)

Postby crispy » Tue May 15, 2018 2:28 pm

Yes.
Details:
https://www.gov.uk/government/publications/averaging-for-creators-of-literary-or-artistic-works-hs234-self-assessment-helpsheet/hs234-averaging-for-creators-of-literary-or-artistic-works-2018
Thank you very much!

crispy
Posts:6
Joined:Tue Jan 30, 2018 12:26 pm

Re: Averaging (self-assessment, cash-based accounting)

Postby crispy » Sat May 26, 2018 1:15 pm

Hi all,

Further to this, I'm having trouble understanding the averaging section of the online form. Here's the situation:

In 2016-17, I took £7,428 (net) as a writer.
In 2017-18, I took £2,273 (net) as a writer.

After the averaging calculation, this comes to £4,850 per year.

What I'm struggling to understand is what the self-assessment return requires of me now. My understanding is that I should enter an averaging adjustment of -2,425 (which is the figure I must deduct from last year's net profit to reach the yearly average of £4,850) but I've clearly misunderstood as this seems to break the form. Can anyone tell me where I'm going wrong? Thanks, thanks, thanks.

crispy
Posts:6
Joined:Tue Jan 30, 2018 12:26 pm

Re: Averaging (self-assessment, cash-based accounting)

Postby crispy » Sat May 26, 2018 2:41 pm

Essentially, I don't understand what to enter on the 2017-18 form. If I enter £4,850 (my average per year over these two years) it adds that sum to my net profit for the year, which isn't right at all. So what does this box expect to receive?

Maybe I'm supposed to add whatever sum it takes to get the net profit up to £4,850 but that seems like a weird hack and surely not what the form actually wants.

And even if I enter £2,578 to get it up to the average, how do I make the system understand that I declared too much last year once averaging is taken into account. Gaaaaaaaaaaah! I might just not bother. I'll just declare my net profit and pay whatever it asks for.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Averaging (self-assessment, cash-based accounting)

Postby bd6759 » Sat May 26, 2018 2:59 pm

It is explained in the link that pawncob gave you.


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