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Where Taxpayers and Advisers Meet

Tax efficient part-time business

PetersTax
Posts: 2
Joined: Sun Jan 25, 2015 9:56 pm

Tax efficient part-time business

Postby PetersTax » Sun Jan 25, 2015 10:10 pm

I want to start a small part-time business, but really want to make the most out of my initial investment. I am expecting to make a loss for the first few years at least, so I'm wondering whether there is a way to get my tax back on my initial investment. I'm hoping to eventually make a profit, but probably hundreds rather than thousands of pounds per year.

I did see something where I could claim my tax back on my money that I put into the business, but I would need to work at least 10 hours a week to do that. Although I will sometimes work 10 hours/week, there will be many weeks where I don't work that long. I can't find the details now though.

Does anybody know if there's a way to save tax up front?

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: Tax efficient part-time business

Postby GlobalTaxAdviser » Mon Jan 26, 2015 2:03 am

If you are a sole trader you can set the loss against all of your income in the current tax year and also carry back to the previous tax year this includes any tax you have paid in employment

PetersTax
Posts: 2
Joined: Sun Jan 25, 2015 9:56 pm

Re: Tax efficient part-time business

Postby PetersTax » Mon Jan 26, 2015 6:29 pm

I've found the document https://www.gov.uk/government/uploads/s ... /hs227.pdf

It seems to say (on page 4, 3rd bullet point) that I would need to work an average of 10 hours per week. So I would need to 'force' myself to work over 500 hours per year. This will be easy for the few few months when I will be building a website, learning about finances etc., but I have no idea how much work I'm going to get after that. I guess I should log my hours and see what it looks like at the end of the tax year. If I start half-way through the tax year then I guess this would be easier to achieve eg. only 250 hours for 6 months? Then the next year, where I hope to make a small profit, I wouldn't need to do this anyway.

With the potential benefit (getting a lot of tax back), it may be worth me doing the extra hours.

josetaxationweb
Posts: 1
Joined: Sun Jun 28, 2015 5:20 pm

Re: Tax efficient part-time business

Postby josetaxationweb » Sun Jun 28, 2015 5:36 pm

If you are a sole trader you can set the loss against all of your income in the current tax year and also carry back to the previous tax year this includes any tax you have paid in employment
Hi Globaltaxadviser, I'm in a similar situation. I have a day job (PAYE at higher rate) and I'm actually looking for prospectives and don't expect (though I wish) sales to happen? Can I register as sole trader and book the expenses as losses? My newcomer reading of hmrc rules is that yes.


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