got a couple of questions

[sunrise]

that I think I know the answers to but they're for a friend who's thinking of setting up in business and I don't want to give her the wrong advice
firstly if you don't work so therefore you don't use personal tax allowance do you still have to register with the tax man - I'm thinking you do ??
secondly I know you have to register with the tax man within three months if you're planning on going into business but is it three months from setting up or three months from making your first sale - I thought it was three months from setting up
and lastly if she went into business today but bought equipment say two year or three years ago but still has the receipts can she still claim for the equipment on her first tax return ??? - I'm not sure but I didn't think you could ??
any advice would be great

[jencel]

Firstly - Yes, you do. But her tax allowance will be set against her profit, before any tax is calculated, so she will still gain from the tax free allowance.

Secondly - I'm not sure, but I think it's three months from setting up.

Thirdly - you can claim for things bought before setting up, but I'm not sure how long you're allowed to go back.

HMRC run courses for new starters, and so do Business Link, that would cover all the basics.

[Pauline@weddingtreasures]

Yes she does have to register with the tax man and I do believe you have up to three months (or it may have changed to two) to register but the date has to be from the first day she started the business..

When I did my second tax return with an accountant he did ask me what equipment I had in my room that I used for my crafts and he put down allowances for bookcase, table, computur desk and chair etc and I had no reciept for any of them.. just took them from the house and starting using them.

Pauline

[ladyluckjewellery]

To echo what the others have said;

1. Yes, even if you won't earn enough to take you over your personal tax allowance, you do still need to register.

2. As far as I'm aware, there's no 'grace' period of 3 months any more, you must register as soon as you 'invite' custom, i.e as soon as you make your products available for purchase, at a fair, online etc for example. Whether or not you make a sale matters not to Mr Taxman, it is the 'intention to sell' that he's interested in as a start date.

3. There are allowances for use of previously 'personal' goods now used for business, you can't 'claim back' anything, but you may be able to offset a part of the cost against a future tax bill. However, I personally would only take advise from a fully qualified accountant about this, as rules vary significantly depending on what, and how much you intend to offset, as well as the type of business.

HTH

Claire

[hipchickluce]

I had a course with the HMRC people a month ago, and they said you have a three month grace period to register your business from start up.

You have to register, which means you have to fill in a tax return each year. However, you won't pay tax if you are under the threshold.

One thing that you have to consider is National Insurance. If you register as a self-employed person, you HAVE to pay 'Class 2 National Insurance', which is £2.50 per month. If your takings for the year are not likely to be more than £5K, you can apply for exemption from paying class 2 national insurance. You have to download and send off the form called CF10 'Small Earnings National Insurance Exemption Form'. You can find it on the HMRC website (can't post links yet!).

Hope this helps!

[sunrise]

thanks everyone ,its pretty much what I thought x x