self assesment tax refund - help on posting

sarahuk3

Good Evening,

I currently work on my partners accounts, he has had a self assessment tax refund and wondered where i should post this to? Don't think i should be posting as 'other income'?? I currently work on sage.

Would appreciate any help!

Thanks

Sarah

Nikdoug

If it has been put back into the business then i would say capital introduced.

Monsoon

For a sole trader, personal income tax and national insurance are drawings.

If it's gone through the business bank account, it's drawings or capital (I personally code it to drawings).

sarahuk3

thank you!

snowmarauder

I would code it as tax refund first, then transfer to drawings, in the year it relates too, otherwise you may get taxed on it again in the following year as income, it is after all a tax refund, which is an adjustment by Hmrc on the tax liability of the said year, so the tax liability was overpaid on what was earned for that year. This usually happens when you pay monthly or pay CIS. This only happens when you are a sole trader or unlimitedl

Monsoon

With a sole trader, anything to do with personal tax is drawings and utterly unrelated to sales and purchases in relation to bookkeeping. As long as you have records that show that money received relates to a tax repayment, you would never be taxed on it. There is no need to code it as a tax refund and then move it (you can just mention tax refund in the narrative, if it went into the business bank account) though there is nothing wrong with a belt and braces approach