Account Withdrawals
Davidbyworth
Registered Posts: 71
in Tax
In the process of submitting a self assessment.
Throughout the year there has been several withdrawals from the business bank for personal purposes. I assume these withdrawals should be added to the profit at year end and the appropriate level of tax applied at this stage? Can you confirm?
Throughout the year there has been several withdrawals from the business bank for personal purposes. I assume these withdrawals should be added to the profit at year end and the appropriate level of tax applied at this stage? Can you confirm?
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Comments
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I take it your talking sole-trader
Why would you add theses withdrawals to the profit?
Are they not just drawings?1 -
I assume these withdrawals should be added to the profit at year end and the appropriate level of tax applied at this stage?
Not sure i understand what you are suggesting.
Assuming this is a sole trade business, you calculate profit from income less allowable expenses, or if a cash basis business cash receipts less allowable cash expenses.
Withdrawals from the owner are drawings and don't come into the computation.
Can you clarify what you are trying to do?
EDIT: I have moved your thread to the AAT Licensed members area as I believe you are a licensed member?
EDIT 2: @douglasstroud beat me to it!0 -
This doesn't make sense. You may wish to elaborate.....Davidbyworth said:In the process of submitting a self assessment.
Throughout the year there has been several withdrawals from the business bank for personal purposes. I assume these withdrawals should be added to the profit at year end and the appropriate level of tax applied at this stage? Can you confirm?0 -
Hi
Sorry just read back over my question and no it doesn't make sense. I've confirmed what I thought today with hmrc.
Thanks0 -
Dear David,Davidbyworth said:In the process of submitting a self assessment.
Throughout the year there has been several withdrawals from the business bank for personal purposes. I assume these withdrawals should be added to the profit at year end and the appropriate level of tax applied at this stage? Can you confirm?
Unfortunately your assumption is incorrect.
The withdrawals should not be added to the profit.
This is because the profit created the funds to allow the withdrawals in the first place.
For example, if a business has sales of £100 and expenses of £20 there will be an £80 profit, and the sole trader may decide to withdraw the £80 profit from their business bank account.
You wouldn't add the £80 withdrawal back onto the £80 profit because then you would be double counting the original £80 profit.
I'm very surprised (and disappointed) to see so many people struggle to answer your question, appear to be so confused, and need to ask follow up questions! You actually worded your query in a very understandable way.
I hope my response helps you and others offering their expertise and skills to the public.0 -
Maybe it's time we all quit and looked for alternative careers as we simply can't cope with these technical questions..1
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Withdrawal of resources (assets) for personal use is treating for bookkeeping purposes as drawings and disallowed for self assessment tax purposes.MAAT0
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