The end of the tax
year is almost upon us so I thought I would identify a few key points for the new tax
year.
Rates
From 6th
April 2012 you are now able to earn £8,105 before paying any tax and then pay
20% tax up to £34,370.
For national
insurance it’s slightly different. For self employed you have to pay Class 2 at
£2.65 per week and Class 4 at 9% above £7,605.
Regulations
The HMRC has got
stricter on what can and can’t be claimed as costs by sole traders. Below is a
list of a couple of things that are not allowable:
1. Client/Supplier Entertaining – as more
and more trips and sporting events are being offset the HMRC has now disallowed
all entertaining
2. Gifts – Gifts to customers are only
allowable if they cost less than £50 and are promoting your product or
service
3. Work Clothes – disallowed on the basis
that they have dual purpose, the need to be warm and decent (!) as well as for
business purpose
4. Food or Drink away from home – on the
basis that you would pay to feed and water yourself if you were employed any
food or drink you buy is not allowable
Tips
1. If you claim child tax credits you will
need to complete the required forms by 31 July. By completing your self
assessment tax return as soon as possible after 5th April you can
give accurate actual amounts
2. Is your partner employed? Make the most
of employer provided benefits, especially childcare vouchers
3. Don’t forget retirement planning, for
every £8 you put into a pension HMRC will contribute £2. Consult an IFA for best
advice (I can recommend one if you don’t have one)
4. Record keeping – HMRC can investigate
your tax return at any time and may request to see up to 6 years worth of
information. Make sure you keep all original invoices, receipts, cheque book
stubs and paying in book stubs as well as bank statements. If these aren’t
available the HMRC may charge a penalty.
If you would like to have these items emailed to you in future drop me a line to be added to the list.
