Self-employed questions

kinmomoko

Im a NVQ3 student and also started helping my landlord to do his bookeeping. My landlord lately started self-employed in courier services. I didn't charge him as I treated it as a chance of real live practice experience until I finished NVQ4. Here i have some questions if anyone can give me some advice
1. Now he is using his own van for all courier services. Can he transfer his van as one of his company assets.
2. He is wondering if he should be VAT registrated even his turn over not excess 67,000 a year yet. cos he has paid a lots of petrol cost which he can claim back the VAT if he is VAT registrated right
3. Now I know depreciation can't count as a expenses against taxable income. Instead HMRC giving Capital Allowance. How the capital allowance against taxable income? for e.g. if he brought a new computer for his business cost 500. Am I right if I debit 500 as capital allowance for computer in his profit and loss account?

Many thanks in advance for advices.
Everyone hava a lovely Easter
Kin x

dieselhead

If he supplies all his services to other VAT reg businesses, they can reclaim the VAT he has to add on so it would not affect them. As you say he could then claim back his input VAT on petrol.
If he supplies his services mainly to private individuals and non-VAT reg businesses I would say don't bother.

Gem7321

You don't show capital allowances in the P&L, they will be shown in the tax computation so there is no double entry.

Monsoon

1. Now he is using his own van for all courier services. Can he transfer his van as one of his company assets.

He doesn't have a company; he is self employed. There is a major difference.
He can bring in the van as an asset, yes. It might be more profitable to claim 40p a mile, all depends on his specific circumstances.

2. He is wondering if he should be VAT registrated even his turn over not excess 67,000 a year yet. cos he has paid a lots of petrol cost which he can claim back the VAT if he is VAT registrated right

It depends if his sales are mainly business to consumer or business to business. If B2B (i.e. his clients will mostly be VAT registered) then it may well be worth him to VAT register. If B2C then it might not be so worthwhile. If the market will only suffer, say, a price of £50 for something, then he won't be able to charge £50+VAT if he registers, so he would instead have to charge £50 inc VAT, meaning his fee will be less.

3. Now I know depreciation can't count as a expenses against taxable income. Instead HMRC giving Capital Allowance. How the capital allowance against taxable income? for e.g. if he brought a new computer for his business cost 500. Am I right if I debit 500 as capital allowance for computer in his profit and loss account?

No. You really need to read up on this before trying to do it. Too much info to explain in a forum post but basically:

Depreciation is in the profit and loss account.

As a separate exercise you work out the taxable profit, which is along the lines of:
Net profit as per accounts
Add: Depreciation
(and other disallowable expenses eg owners drawings, entertainment)

Less: Capital Allowances
(and other things)

Equals taxable profit.

Yes, if he bought a PC for £500 he could claim 100% AIA.


It can be very beneficial for you to gain experience this way and for him to get his books done for free. However, be careful - you clearly have a lot of gaps in your knowledge and if he gets a HMRC inspection and they find mistakes, it might come back to bite you.

He needs to know that you are a beginner and unqualified and, as such, you might not get it right. If he knows all this and still wants to go ahead that's his choice but it's only fair he is allowed to make an informed decision.

It really is advisable that he gets a qualified accountant to do the year end things.

Good luck.