is stock taking required for tax purposes?

[Jaybe]

Hi all
I have a tax question please that Im hoping for an answer to.
I havent had the pleasure of filling out a self assessment tax form yet but I was under the impression that as I make teeny weeny sales the tax form would just require me to put total sales figures of basically whats come in (any sales ) and whats gone out (my expenditure for supplies etc) I know to keep receipts and a spreadsheet for sales and expenditures etc as evidence if required and I assummed it would be fairly simple but now Im not so sure as I keep reading about others saying about having to count their stock - Do I need to keep a tally on my stock for tax puposes? or is it only larger businesses that need to do this or will I have to state how much stock I have on the tax form too?
I just dont get why the tax man would be interested?

oh heck Im confused once more. It doesnt take a lot to get me confused!

thanks for any help!

[soyofthenorth]

If you don't do a stock take, you won't know how much stock you have left to make things with. Also if you don't know how much stock you still have, it could make your accounts incorrect so you won't know how well you are doing.

[Jaybe]

If you don't do a stock take, you won't know how much stock you have left to make things with. Also if you don't know how much stock you still have, it could make your accounts incorrect so you won't know how well you are doing.

thanks for replying, sorry Im still confused - so is the stock take just for my own benefit or will the amounts need to go on the forms somewhere??

at the moment I just look at my boxes of supplies and say "ooh that looks a bit low, better buy some more" , cant imagine having to count every bead and finding! would want to! would I have to itemise every teeny weeny bead and list them on my spreadsheet for the tax people to see?

oh heck, im in a panic about it all...

I thought the tax forms would just be interested in how much I sell so they can take their cut? I thought the forms would just ask me to show incoming and outgoing totals and receipts? -
why do they care about my business growing? surely thats just for me to worry about?

Sorry I seem to have a mental block on this and cant get my head around it all.


thanks for any much needed help!

[craftdancer]

I fill in the short self-assessment tax form and have only ever been asked for income and expenditure. I keep detailed records for myself and for examination by HMRC should it be required but there is no need to do a stock take specifically for the tax return.

My profit/loss figure is usually in the area of zero, but that is because I do this for a hobby (although I price sensibly) and only do sales events as and when it suits me so turn over is tiny.

Linda

[Coryographies]

I think taking stock would only be for your own benefit - I surely don't!

I just did my first self assessment online and it was a lot easier than I thought it was going to be, once I got started. Just income and expenditures, no uploading spreadsheets or submitting documents or anything. And it shows you what you owe/get back when you're finished! Easy peasy

I thought I was going to owe but actually got a little bit back in the end... I was scared I did it wrong and got my in laws to check it over haha. But it looks right!

[Seahorse]

Ive done an SA form for about 4 years and have never done a stock take.I think its for your own benefit.
I do the short form and have only been asked for ingoings and outgoings.

[Caroleecrafts]

In the old days before the short tax return, you used to have to put holding stock value which was then written back and carried over to the following tax year. The advantages of this is that is if you do not earn enough to pay tax say in your first year but you could in your second the stock can then be carried forward and offset. This sounds complicated so here goes:

1st year materials bought £3000.00
Sold total £2500.00
Stock take shows £2000.00 value of stock left so profit is £1250.00.
If you used the stock included in this years figures you have in theory lost £500.00.

2nd year no more stock bought but sell £9000.00 using all holding stock
Total to be taxed £9000.00 less personal allowance of say £5000.00 (to make it easy) taxed on £4000.00
If you had written back the unused holding stock of value £2000.00 carried forward to this year would mean you would only pay tax on £2000.00.

You have to make the decision what you do most accountants use the latter method but know a lot of sole traders do not. It really depends how you see your business going do you anticipate earning more than the personal allowance each year? sadly most crafters do not therefore never have to pay tax.

This is the simplest format of course you also have overheads as expenses like stall rental, electricity etc but used this analogy purely for the stock take question, so don;t all jump down my throat.

PS Have done accounts for years for major corporate industry and small self traders as well as partnerships so have a fair knowledge to get me by...

[StefC]

Thanks Caroline.

That's another piece of info to put into my escape plan

[Mythillogical]

Really helpful explanation I think Caroline- thanks!

[Caroleecrafts]

It makes sense to me but could be clear as mud, I know what I want to say and know what I mean but whether it is good enough not sure, do try to help

[Jaybe]

Thank you all so much for your replies!
I feel so relieved now I understand it more!

[Thistlemoss]

Do Materials count as stock or is it just finished products? Cheers.