Crazy...
- Thread starter dancook
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- thomas
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It's not a rant at you but I just don't understand the system. What is the limit? You probably need a office so you can also declare your house. You need a phone so you can declare your phone bill. You need a car to go to appointment so you can declare your car. How much expense a business can have taken off there income before paying tax and is this expense threshold different for a business trading 10 day a year or a business which trade 365 day per year. Not ranting but honest question really.
See if you have two businesses:
-one business work 20 days and makes £20k, buy camera for 20k so pay tax on 0£
-another business work 20 days and makes £20k, rent camera for 2k so pay tax on £18k
Both business have provided the exact same service but one of them pay no tax and have 20k of camera asset, the other has paid tax and end up with no asset.
Is this how it work?
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- Steve
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Before I say anything, I'm not an expert and may get some things wrong, also questions like this are the main reason to get an accountant, a good one will probably save you money in the long run!
Generally you can only claim for actual business use, so vehicle expenses would be claimed on actual business mileage on a private car or you would take a personal share off the total cost if you claimed it was a business vehicle. If you are claiming for expenses for a home office you would need to be able to justify the time you spent working in the house so would be proportional to the amount you traded from there. Same with the phone, you can claim a portion for business use (would need to be able to justify this if challenged) or take off personal use if it is a business phone.
Very simplified, but pretty much I think. Worth saying that the second business has £18,000 in the bank (before tax) which actually might be more important to the owner than having the cash tied up in an asset.. Also, my understanding is that the camera would be owned by the business so if you then sold it at a later stage, that would be income for the business and not just tax free money in your pocket.
Just a note to check this one with an accountant.
Many years back when I was self employed for things that were used for both business and personal use (Eg my car), I had to declare a % Business use, and could then claim that % - so if my car was £5k, and I claimed 50% business use, then in effect I could claim £2500 for the car against tax.
My accountant knew the various % figures for a range of things that HMRC would accept, and advised accordingly.
It may be that for a photography business, they'll accept 100% for a camera, lenses, etc. and not care that you actually are using it 75% business, 25% personal (for example), but it you have a friendly accountant it's worth checking.
Sure I could have a look, but It would be pretty damning to expect you to go into a paid job never having used the equipment, you need to know it inside out through practice
if I get my wife to pay me a penny per day .. does it count now ? Sure I could have a look, but It would be pretty damning to expect you to go into a paid job never having used the equipment, you need to know it inside out through practice
You're not expecting rules to make sense are you?
I suspect it will be fine, as the camera gear is a primary business purchase (much as my PC was when I was self employed), rather than a shared item, such as a car, where you will have some purely business and some purely personal use.
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only one way "better call saul"
Which was the one common aspect of what people who wrote about Tax and Expenses said!
Quite true ... but then I was going to write my opinion ... and decided was best just to say "contact an accountant / HMRC" instead!
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Check their guidance, it’s a common enough scenario, and they expect if you’re running a business you might have some private use, which they’ll expect to see reflected. And if your business is very little work, they’d definitely expect to see that reflected.
In your shoes, I’d notify ‘all’ the cost of 5e gear, then claim a percentage usage for the business. The alternative is to notify them that you have a load of separate gear that you use for personal use.