Allowances for self employed

[Steve1969]

I have recently started a bookselling business working from home. I have hired an accountant, but being honest hasn't been much help answering a lot of queries I have, and he states he doesn't need to do my books until January 2006, which worries me. My turnover will be around £40k for the 1st year. i started on 30th August 2004.

Anyway, I wanted to ask;

1. What can I claim when doing the tax return?
2. Can I hire a car for the business and claim the hire cost?
3. Is it worth registering for VAT?
4. Is there any hints and tips anybody has to make me more tax efficient
5. i am currently using my own car for business purposes, how do I record the milage per day when i am only doing about 200 miles per month, do i just give an estimate on my tax return or does it have to be recorded daily.
6. What records do I need to keep for tax reasons.

Thanks in advance.

[ian.wright@beechams.]

Oh dear, I think you need a new accountant if he can not answer these questions. I can only give you brief answers as it would take too much of my unpaid time try to answer your queries.

1. You can claim pretty much everything relating to your business, from paper clips to a spare room used as an office at home. Pre-trading expenditure could be considered relating to costs incurred before you started trading. Another item is capital allowances on capital items like your car and compueter equipment. The list is endless, but just think if it is in any way connected to you doing business then it should figure in your accounts or at least a proportion of it.

2. You can hire a car and claim the expense. Maybe not all of it as there is reduction for expensive cars (over £12,000)

3. I guess not untill you reach the threshold £58k currently. You should always check your turnover to ensure you register. As soon as your turnover within a 12 month period goes over £58k you must register. You may bebefit from the flat rate scheme, a simpler and sometimes cheaper way to pay vat.

4. Tips..... Is you wife a partner in your business? She too has tax allowances. She would of course have to work in the business! Keep all your receipts and good records, without these the tax man could reduce or refuse various expenses. Consider buying capital items before then end of your accounting year rather than after.

5. Whilst you are below the VAT reg limit you could claim all expenses relating to motoring on a pence per mile as given by the Inland Revenue. You should not estimate these but record actual business mileage in say a diary. This may be more worthwhile than actually calculating the actual motor cost which includes petrol, mot, tax, finance, depreciation etc.

6. Keep all records. You have to keep them for 6 years.

I hope this helps

Regards

Ian