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Post Info TOPIC: Rates of Tax
whiskerspanther


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Rates of Tax
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Hi

Can someone please tell me if a self employed person pays tax on the total sum of his income for the year, or if his/her expenses are deducted first then the tax is worked out on the difference?
Also where you have allowances for say tools or uniform what amount of tax relief do you get?
I have looked on the Government website but cannot find the answers.
One last thing, I see there is a personal allowance of just over £5000 do I take it this is deducted from the gross earnings for the year and the tax worked out on the remainder?

Thanks



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Silly Digits


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Income less expenses then less personal allowance. You will then have your taxable income.

This is the basic rule, but make sure you dont put down as allowable expenses entertaining customers etc which are disallowable. These may have to be adjusted to obtain a net profit for tax purposes. Also depreciation is disallowable, but capital allowances/Annual Investment Allowance can be claimed.

The tools/uniform will be part of your expenses.

I would suggest that you obtain the Self Assessment Tax Returns Guide from HMRC, this tells you in detail what you can claim, and is a very good reference.

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whiskerspanther


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Thank you this has been a great help. I am hoping to attend a tax course so hopefully that will tell me all I need to know, but I will certainly investigate the guide book you mentioned.

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