Tax computations

RS1069 Registered Posts: 14 New contributor 🐸
Hi can anyone give me a simple breakdown of the rules applied to producing a tax computation for a sole trader. I have done his profit & loss and balance sheet and am happy with figures.
When I go on tax return what will the question be about his business profit? (Out of this he has taken his wages as drawings)
Do I add on the depreciation to the net profit? There is no entertainment. Anything else?


  • phoenixd
    phoenixd Registered Posts: 68 Regular contributor ⭐
    Add back depreciation and other non business expenses. Note that a sole trader's drawings (or his/her wages if you choose to call them that) are not deductible; pension premiums are treated differently. Don't forget to calculate the capital allowances as these are allowed against tax. Can't think of anything else off the top of my head.
  • RS1069
    RS1069 Registered Posts: 14 New contributor 🐸
    Thank you, but none of those. He isn't allowed capital allowances as he has a cash only business. Only cars are allowed and this doesn't apply here.
    My question is if I make the premises/fixtures & fittings he has been purchasing throughout the year on a weekly basis into fixed assets with depreciation, and not as an item of expenditure, it makes his profit so much higher and he will have to pay more tax.
    It doesn't seem fair. Do I have to make them as capital expenditure?
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