Week 3 - Self-employment Income Flashcards
How much is the allowance for self-employment per year?
£1,000 per tax year
In what case would trading receipts be exempt?
If less than £1000
If trading receipts are bigger than £1000, how does allowances work?
Trading income - expenses / Trading income - £1000
When is expenditure deductible?
Only if it is incurred for trading purposes
What entertainment and gifts are disallowable (not to be deducted)?
- Customer entertaining costs
- Gifts that cost more than £50 per customer
What entertainment and gifts are allowable (can be deducted)?
- Staff entertaining costs
- Gifts to employees
- Gifts to customers that are less than £50 and are food, drink or tobacco
What in terms of self-employment is disallowable (not deductible)? (9 examples)
- Expenditure on motor cars
- Increases in general provisions for bad debts
- Non-trade bad debts
- Donations to national charities
- Gift aid donations
- Political donations
- Fines and penalties (not when employee is on a business activity)
- Fees relating to capital expenditure
- Fees for dealing with HMRC
What in terms of self-employment is allowable (deductible)? (16 examples)
- A decrease in a general provision
- The creation or increase/decrease of a specific provision (something a company predicts will go wrong)
- Trade bad debts
- Small donations to local charities
- Used plant and machinery donated to charity
- Subscriptions to professional bodies
- Parking incurred by employee on a business activity
- Legal fees related to trade
- Legal costs of renewing a short lease (less than 50 years)
- Costs of registering a patent/copyright
- Redundancy payments
- Educational courses
- Employers pension contributions
- Interest payable
- Non-recoverable VAT
- Expenditure not shown in accounts
Why is 15% disallowed on certain car leases?
If a leased car has CO₂ emissions over 130g/km, 15% of the lease payments are disallowed for tax purposes.
If CO2 emissions are more than 130g/km, how much is allowable for business use? (Percentage)
85%
