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Where Taxpayers and Advisers Meet

Pre-trade expenses. Self-employed person. Tax deduction

Concious_Entrepreneur
Posts:7
Joined:Thu Nov 28, 2019 10:38 pm
Pre-trade expenses. Self-employed person. Tax deduction

Postby Concious_Entrepreneur » Fri Nov 29, 2019 12:15 am

Pre-trade expense.
To whom it may concern,
In brief, I am seriously considering to become self-employed shortly, but before I will do that I want to be more tax and law conscious. That why this website had supported me a lot to achieve that so far. Unfortunately, I could find anything associated with pre-trade expenses. Correct me if I am wrong. I wonder if any period launching a company (sole trader) when everything which I bought, could be then treated as a pre-trade expense has existed, so then I could deduct some portion of it from my overall turnover? To be honest with you it will be very helpful, so then I could invest on good quality equipment which is necessary to run such business like this. I most interested in:
Buying a second-hand car such as mini-van or van only for business purposes. Mainly for clients meeting, transporting equipment from one place to another etc.
Graphic design equipment such as to monitor calibrator, Pantone colour books, hi-end monitor for colour correction
DSLR Camera + Lenses
Video calibrator colour books and so on.

I can end up very easily with thousands of thousands of pounds stocked in equipment, hence it's crucial to decrease these costs from company income as much as possible.

I read some article at another website (unfortunately I couldn't remember the exact name) that depending on a way of accounting method i.e. traditional accounting vs cash basis accounting. I have to claim it differently. I am not sure which one is better one in terms of receiving a more significant tax deduction from the initial investment cost for a future business in this case scenario.

Many thanks for supporting me in this matter.
I am looking forward to hearing from you.

Yours faithfully,
Peter

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

Re: Pre-trade expenses. Self-employed person. Tax deduction

Postby pawncob » Fri Nov 29, 2019 12:27 pm

The first of these answers most of your question.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46351
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46355
https://www.gov.uk/expenses-if-youre-self-employed
With a pinch of salt take what I say, but don't exceed your RDA

Concious_Entrepreneur
Posts:7
Joined:Thu Nov 28, 2019 10:38 pm

Re: Pre-trade expenses. Self-employed person. Tax deduction

Postby Concious_Entrepreneur » Thu Feb 27, 2020 11:05 pm

Thank you pawn for your support

Indeed, these articles were helpful.

Thank you once more for your time and consideration.

Yours faithfully,
Peter

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

Re: Pre-trade expenses. Self-employed person. Tax deduction

Postby bd6759 » Fri Feb 28, 2020 12:56 am

Worth noting that there is huge difference between "company" and "sole trader". A sole trader is not a company. The treatment of expenditure and the tax consequences are not the same.

Concious_Entrepreneur
Posts:7
Joined:Thu Nov 28, 2019 10:38 pm

Re: Pre-trade expenses. Self-employed person. Tax deduction

Postby Concious_Entrepreneur » Sun Mar 15, 2020 4:48 pm

Mr Bd6759,

First and foremost, thank you very much for your time spent to respond to this enquiry.

As a more experienced person in this manner,
could you give me some best practices to record and claim these pre-trade expenses?

Should I keep all invoices, receipts and then just claim from self-assessment during the first years of operations as a sole trader?


Kind Regards,

Peter


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