Who is right-my husband or me?

[PoppyPug]

Hiya Geeks!
I've been a beauty therapist for 10 years but I've been employed so not had to worry about accounts etc... As of August I am registering as a sole trader very excited!!

I understand about paying tax etc and know its 20% of my profits but my husband and I are having a disagreement over expenses!! I have ordered a few things off vista print for marketing etc... The total cost was £65 . now.. Do I take all of this out of my revenue or just 20% of it?

My belief was that you could claim back 100% in expenses if it was solely for use of my business

My husband says its 20%


Who is right??

Sent from my Nexus 4 using SalonGeek mobile app

 

[persianista]

You are.
Ok, there is no claiming back involved. Each year you add up all the money you have taken, which is called your turnover.
Then you add up all the money you have spent on your business, which are called your expenses.
Turnover minus expenses equals profit.
You pay tax at around 20% of your profit, depending how much profit you make, it may be less than 20% or it may be more.

I'd recommend you find a good accountant. They save you more than they cost you.

 

[Black Sheep]

You can claim up to 100% of your expenses.

At the end of the financial year, you would deduct all of your expenses from your total income and that would give you a profit or loss (hopefully profit!)

You then pay tax on this amount, the amount will depend on your income as rates are marginal however a good rule to follow is the 20% rule.

The only time you would claim less than 100% of your expenses would be for example if you had a vehicle that you used privately and for business use, you'd need to determine what percentage of time is used for the business and you could only claim up to that percentage.

I hope all of this makes sense and I haven't confused you!?


Beauty Therapist
Black Sheep Beauty
www.blacksheepbeauty.com.au

 

[PoppyPug]

That's brill!! Thanks guys x

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[nicole333]

To prepare you I suggest having a look on the HMRC website and registering for some Webinars. They are very helpful for the self employed.

 

[gillian w]

The Definitive Guide to Common Business Deductions

 

[Kim Lawless]

The Definitive Guide to Common Business Deductions

Hi Gillian. I was enjoying reading that until I noticed the $ signs instead £. x

 

[PoppyPug]

Thanks Gillian that's a great help!

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[gillian w]

Hi Gillian. I was enjoying reading that until I noticed the $ signs instead £. x

It transfers pretty much to what's allowed in UK.There isn't one as good and as simple for UK that I can find.

PoppyPug....Its good to go on the workshops the tax office offer,if they still do,they give you booklets about the sort of things you can claim for.

 

[Suzy c]

Yep, you are right

 

[Cheshire_Gal]

I think your husband has got a bit mixed up. In essence your gross profit - costs gives you your taxable profit. So you get tax relief on your costs. So for ease your gross profit is £100. Its cost you £10 to make £100. £100-£10 = £90. 20% of £90 is £18. 20% of £100 is £20. 20% of £10 is £2. £20-£18 = £2. He probably meant the amount of tax you pay is minus 20% of your costs x

 

[Cheshire_Gal]

Hiya Geeks!
I've been a beauty therapist for 10 years but I've been employed so not had to worry about accounts etc... As of August I am registering as a sole trader very excited!!

I understand about paying tax etc and know its 20% of my profits but my husband and I are having a disagreement over expenses!! I have ordered a few things off vista print for marketing etc... The total cost was £65 . now.. Do I take all of this out of my revenue or just 20% of it?

My belief was that you could claim back 100% in expenses if it was solely for use of my business

My husband says its 20%


Who is right??

Sent from my Nexus 4 using SalonGeek mobile app

You dont claim it back in as someone gives you the £65 back. You get tax relief on it, so you save £20% of the £65, or dont pay 20% of the £65 x