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Where Taxpayers and Advisers Meet

Becoming Self Employed

dawnik
Posts:10
Joined:Wed Aug 06, 2008 3:50 pm

Postby dawnik » Tue Feb 20, 2007 5:02 am

Hi, I am a married 45 yr old woman just about to leave my job to become a self employed training and marketing consultant.

I have secured my first consultancy and agreed monthly services which will amount to around £22k per year plus they will pay me 40p per mile and provide a paid mobile strictly for me to use for their group. I also intend to do other work for other clients.

I also need to buy a car and believe there are tax allowances on new small vehicles.

I would like to know how best to operate from the start. Would it be worthwhile in getting a loan to buy a new small car, what would be the advantages and as I would invoice the company each month for mileage would I just claim that as income and offset the business % of the running costs (petrol, tax, insurance etc) as an expense?
Many thanks for your help...I'm feeling a bit daunted by it all!

CDavey9501@aol.com
Posts:513
Joined:Wed Aug 06, 2008 3:13 pm

Postby CDavey9501@aol.com » Tue Feb 20, 2007 5:39 am

I know this may not help but you should contact an accountant. There are obviously lots of questions to ask. Most accountants will not charge you for the initial meeting in the hope that they will impress you enough to appoint them to act on your behalf. Good luck.

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Tue Feb 20, 2007 7:38 am

This is a time when an accountant can be very useful - i.e. before you have already gone down a particular route.

Your mileage rate which you invoice is taxable as income - there is no legal requirement for it to be 40p (or less).

If your turnover is below the VAT threshold, by concession, you can use the Inland Revenue's Approved Mileage Rates (40p per mile for the first 10,000 miles, and 25p thereafter) plus any finance interest, instead of calculating the business % of all the relevant costs (including Capital Allowances).

Which is the better option will normally depend on the price of the car, its economy and reliability and the business miles travelled.

Also, make sure you may have a formal Consultancy Agreement drawn up - this may head off any HMRC challenge that you are actually an employee.

You will need to register your new business within 3 months with HMRC, or face a £100 penalty.

dawnik
Posts:10
Joined:Wed Aug 06, 2008 3:50 pm

Postby dawnik » Tue Feb 20, 2007 8:52 am

Thank you both very much for your responses. I think it sounds as though it might be worthwhwile consulting an accountant.
Thanks again.

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Tue Feb 20, 2007 9:08 am

You're welcome.

Good Luck with your new business.


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