Accounts - Tax

[Becky_simon]

Hi everyone

I haven't posted in this forum in ages!

Just need some 'fool proof ' clarification on some accounting information please.

My business is allowed a certain allowance of non taxable income, 2014-2015 is it £10,000? This figure is INCLUDING all Expenses etc taken from it first isn't it?

Once I reach this allowance (less expenses etc) am I correct in thinking if it's £2,880 or less your taxed 10% or if it's £31,865 your taxed 20%?

Just need someone to confirm my understanding as correct?

 

[persianista]

It depends.
Are you a limited company? There is no tax allowance on that. You are taxed on profits from the get go, however, you can pay yourself a salary using up your personal tax free allowance of 10k PA

If you're a sole trader, your profit is your salary. So after all business expenses are taken out, your tax is calculated from that. You have approx 10k tax free allowance.

For example:
You turnover 20k in a year.
Your expenses to do that are 5k
Your profit is 15k
10k of that is within your tax allowance, so you pay tax on 5k.

Hope that helps.

 

[claire@evolve]

I think the tax is 20% ? To be safe I deduct 20% from my weekly takings ( after iv deducted my rent ) and I leave that in my business acct , I then pay for my stock from that then hopefully that should leave plenty for accountant , tax man ! Any left is a bonus ! This is my first year at my new system though !