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what can i claim for....

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  • what can i claim for....

    im thinking of starting a small part time business selling hand made aprons, bunting, christmas decorations etc. ive conatcted hmrc but found them hard ish work. ive even signed up for some online courses. however ive purchased some fabrics, a sewing machine and office supplies so what i want to know is can i claim them as a business expense ?
    i dont intend to make alot its just a hobby but i want to do things above board so ill be getting insurance etc so can i claim that too. can i register with hmrc even if i dont end up selling anything and if i register with them tomorrow when will i need to do my first tax return?
    im also employed part time with the nhs so i already pay tax nat insurance etc.

  • #2
    Hi there and wlecome to the world of crafting!

    I found myself a good accountant when I started and it was well worth the money. She also does my tax return every year (for a fee) but the fee is allowed as a business expense. I'm in a similar situation to you in that I'm also employed part-time and my tax is quite complicated so the accountant was a good investment for me. The tax return is due by the January (I think!) after the previous April but it might be possible for you to give the date you started trading as 1 April 2013 but claim for pre-trading expenses between January and March. That would avoid you having to do a return for what remains of this tax year. I'm not 100% sure about that though so maybe someone else could advise.

    I craft from home so I claim gas, electricity, petrol etc and the accountant takes off a reasonable proportion for my personal use. I also claim for using my Home PC, telephone and broadband bills, personal/public liability insurance for the craft goods, plus everything related to the business (so your sewing machine, materials etc).

    You can claim a tax rebate on tax paid if you make a loss for the first 3 years of the business. Thereafter you can make a loss but no rebate.

    When you register, HMRC will ask you to pay National Insurance contributions but if you don't make a lot of money you can get out of paying that. Again, my accountant sorts that out for me. If you weren't already employed it might be worth thinking about paying NI but as you pay it already it's probably not worth it.

    I hope some of that is helpful and hopefully, if I've made any errors, someone here will correct me. I'm no expert - this is just my own experience.

    Best of luck with the crafting.



    • #3
      I wouldn't worry about an accountant at this stage - go to the training and ask all of the questions you have. The courses are super-useful and you'll be surprised at just how much you can claim for.
      Custom tribal belly dance costumes & accessories

      Unique jewellery for those who love to turn heads


      • #4
        Hi there and welcome !

        Do more research on here - there is loads of information on how to set up your own business and really useful.

        You will also find tuns on the internet - I found Enterprise Nation and Small Business particularly useful. But there is loads more.

        Good luck with setting up your business !
        Passionate about all things handmade...

        Proud owner of WowThankYou - stylish and affordable way of selling your crafts and makes

        Friendly advice and coaching for small businesses

        Cocoa & Heart Website


        • #5
          Originally posted by Cocoa & Heart View Post
          Hi there and welcome !

          Do more research on here - there is loads of information on how to set up your own business and really useful.

          You will also find tuns on the internet - I found Enterprise Nation and Small Business particularly useful. But there is loads more.

          Good luck with setting up your business !
          Yes, that's true, there are LOADS of threads on here where people have asked the same questions that you no doubt have.

          I sometimes find that typing into google my question and then following it up with the word craftsforum brings up a relevant thread and then once you scroll down to the bottom of the page you'll see thread headings that are similar (that happens if you do a search within the site or indeed at the bottom of any thread) so there are plenty of ways to find the answers you are looking for.
          Custom tribal belly dance costumes & accessories

          Unique jewellery for those who love to turn heads


          • #6
            The answers are yes and about a year.
            Fabrics, a sewing machine and office supplies - for now just keep a note of the costs and put the receipts somewhere safe.
            If you register you'll be asked to fill in a tax form. If you like doing things by hand on paper it needs to be sent in October time but if you have lastminuteitis, like me, you can mess about until January then do it online.
            After your mini course, laid on by the tax people, you'll be overwhelmed by what you can put down as tax allowable expenses. You can be overwhelmed now if you want by jumping to here (Actually this page has been rewritten and it looks a lot clearer than it used to )
            When you eventually fill in your tax form you'll need to split your sewing machine and fabric up and put them in different boxes (so most of us give up writing our expenses in a book and switch to a computer program that does all this for us). In old speak it used to be called tools and materials. Tools last a long time and materials get used up. On the form it's called capital expenses and business expenses.

            Not selling anything - as you have a 'proper job' you'll be paying tax through PAYE, I assume, so on the form there's a box for that.....and here's the good bit.......if you are a complete failure at this new business (and enter a loss) you might get some tax back. It cheers you up if nothing else.......

            A bit of advance warning - if you ring up HMRC to register they might say fine, we'll do it now or they might say come back when you've sold something. They don't seem to be singing from the same hymn sheet. (The rules change every year and it's hard to keep up.) But the bit that comes over loud and clear is "We'll fine you £100 if you run a business and don't tell us". So insist they register you when you want them to.


            • #7
              thanks for the very valuable info. just by chance i phoned hmrc this morning and your dead right i got pushed from pillar to post and everyone had a different answer. i got so mad i demanded to speak to someone who knew what they were on about. i was then told by a very stern woman that the minute i start buying equipment then i need to register, oops. ive been buying tools and equipment since late december so where does that leave me. i was told when i first phoned two months ago i only needed to register once i started selling.....god i wish they knew what they were on about.


              • #8
       the real world......there aren't enough tax men to check up on every sole trader. They do pick on my lovely builder friend .....and turn your house upside down if you haven't kept your receipts in an orderly fashion and look like you might be a dodgey dealer.
                What happens to 99% of us is we fill in the computerized tax form which doesn't ask you when you bought your sewing machine. It just says put the total amount of money spent on tools this year in this box. When all the boxes are filled in the computer says "How pathetic. You didn't make enough money to pay any tax." Or it says "Yipee you clever thing. Pay this much tax NOW!" Or is says "Wow! You done well. You are rolling in it. I'm going to nab you for next year's tax as well as this one's in case you do a runner to the Costa Brava." (Obviously it doesn't really say that. It just puts numbers in another box. But that's what I imagine it's thinking.)

                My take on the confusion at the tax office is: the crumblies were taught to ignore anyone that earned under the personal allowance, (I'm a crumbly and I remember those idylic days), the middle agers got taught let's get every business person registered then if they do make money we've got our beady eye on them, and the young uns either got told the govenment's run out of money, nab anyone quick and get them in the system before they realise what we are doing...or there's no money to teach you anything - read these rules which change every year and just get on with it.


                • #9
                  i went to see a lovely accountant that a friend recommended today and he expalined everyting to me but to be honest, thanks to everyone on here i alredy knew what he said. he even went to the trouble of filling in the registration paper work for me and will post it too!!! all at no cost, how nice. he even filled up the paper work to make me NI exempt as i alredy pay it.
                  so now im keeping every receipt related to my new business. what i forgot to ask it who will remind me when its time to do my tax returns. will the lovely people at the tax office let me know or is it up to me to know this??


                  • #10
                    You already knew everything - whey hey for us!

                    Will you be reminded? You bet. You'll get harrassed on the tele and the radio, then 'shouted' at by post, then threatened in a very menacing way. I find it all very rude, annoying and unnecessary. I write when to do it on my calender and I do it then. I really think they ought to send the nasty tax men on a peace and love interpersonal skills course.

                    On the bright side it toughens you so you don't collapse into a quivering weepy jelly when people tell you your work is too dear and they can buy that stuff down at the Pound Shop at half the price. Have you found those threads on this forum, yet?

                    How's your blood pressure, by the way?


                    • #11
                      I would find an account that will advise and do your tax return for a fixed fee. I don't know what they would charge for your situation but I know they do a fixed fee when starting up a Ltd company. My fee was £600 for doing year end report and tax issues when I started my VAT registered Ltd business. As you don't need a year end report your fixed fee shoulod be significantly cheaper than mine. My friend is in your situation but she gets a relative to do her tax and accounts. They saved her a a few hundred punds by claiming/blancing her hobby business against her full time job income.

                      If you are employed you will be paying class one NI. Self employed usually pay class two NI but if your profits are less than £5,595 per annum you can apply for an exemption by submitting CF10 form to HMRC. Sometime class four NI applied for self employed but I haven't looked into that as it doesn't apply to me.

                      I dodn't think I have anything else to add as its already been covered in the previous posts.


                      • #12
                        annie, ill die if someone were to insult me by saying that..... honest ill just not know what to say, so comon tell me a quick on liner to have ready cos ive heard people do say that. which amazes me cos surely you wouldnt go to a craft fair and expect to find the same quality or love gone into a hand made piece as you do in the pound shop. people make me sick. how often does it happen, would you say at least once every craft fair or surely not more????


                        • #13
                          by the way and sorry for all the questions but ive just bought some craft magazines and craft books for inspiration more than anything but got one sewing book cos i liked how easy it was to understand, can i put them in as an expense? or is that too cheeky


                          • #14
                            Tayto. What to do if someone insults you? Well, it usually takes your breath away and you are left speechless so it's not usually a problem....unless it's a 'dead' fair where you start questioning what you do and why you are doing it . That's fatal. You must believe in yourself at all times. And of course the customer is always right.

                            Books are good. They are research. All business gurus say you have to do research. So research must be a necessary business expense.
                            Being serious, if the book is advancing your business efforts you can put it down as a tax allowable expense.

                            Have you come across the dilemma of using something in both your personal life and your business life? Maybe your computer or your phone? You can put a percentage of the cost down as tax allowable. It can get complicated but if you go on that course and ask about these things the tax man will have come up with a solution. One that crops up a lot is working from home. There's a formula for heat and light to do with counting your rooms . Using you car has a formula. They should tell you to be careful over claiming part of your rent or mortgage. Rent is straight forward but there are strings attached with morgage repayments. It can be better not to claim them. All should be revealed on that seminar.


                            • #15
                              You divide the cost of the bills by the number of rooms in your house (and number of days business and domestric use) and claim the percentage of the bills that match the percent age of shared rooms. You can't count bathrooms, can't remmebr about kitchens. I haven't explained it too well but you get the idea if you want to look it up.

                              If you claim that some rooms are for business only then it causes complications with capital gains tax when you sell the house. I know I have to declare how many days a week the rooms are for business and how many for domestic. This irks me as I have had to clear two rooms out at home to use them as offices. I don't want to move into an office as I work outside 9-5.