Initial investment

[badvoc]

Hi just bought the simple sole trader 08-09 (yes I do leave everything until the last minute, I know!) Couple of little questions:

1) my business started during this time period, where and how do I put in original investment of my own money to start the business.

2) I work from my own home, is there an amount I can claim for electric/heating per month without having to produce receipts/bills (which I haven't kept any from that long ago.

Probably simple questions but I haven't much time left to find the answers lol

Thanks in advance for any answers

[antonycc]

The money introduced will get accounted for by the entries in "Purchases" that were made with this money.

1. If you make your initial investment back in you'll only be taxed on profit. If you don't you can bring forward losses from the first year into the next year. Cell F 29 on the Business Details tab of Sole Trader.

2. Personally I'd ask HMRC to advise as this is an often abused area. I've heard of family pets as "guard dogs".

[badvoc]

Hi and thanks Antony

I've actually made a profit on my first year which was good for me lol and thankfully not quite enough to have to pay taxes.

I know I can claim a % for electric and heating just wasn't sure if it could be done without a receipt for it lol wasn't planning to take the piss... although do you think I could claim for a "guard cat"?

[uejorj]

Ref Q2, there are two ways you can deal with the heat and light issues, but in reality it depends on what line of business you are in - if for example you do actually work at home then you can charge a percentage of the heat/light bills against the business and even a percentage of the mortgage interest costs if applicable, the downside of this is that you could have difficulties if and when you sell your property as HMRC could regard your business use as liable for capital gains.
If on the other hand you are based at home rather than a workshop or office but work outsidse the home (eg if your were a plumber you would work in customers premises etc) then it is advisable merely to charge a nominal amount, and in fact if you charge yourself £8 pw (£416 pa) ' use of home' HMRC accept this, you might get away with a bit more.
Whatever you decide to do be aware that if HMRC ever enquire you will need to justify any expenses claimed other than the £8 or so pw.

Rgds

John

[badvoc]

Thanks John.

I work from home, selling online, and have two rooms just dedicated to stock. I was just thinking if I could even put down £3-4 a week towards electric etc. I would be happy enough

[Lord Hutton]

Originally Posted by badvoc

Thanks John.

I work from home, selling online, and have two rooms just dedicated to stock. I was just thinking if I could even put down £3-4 a week towards electric etc. I would be happy enough

Basic rule of thumb is that if you have dedicated rooms in your private property used for your business, either for storage or as an office, you can claim a proportion of your houshold costs: all your utilities, council tax, buildings & contents insurance. Ignore any "common areas", kitchen, hall way, bathrooms, and count the number of other rooms. So if you have 5 rooms and use 2, you claim 2/5 of the above costs each month. Post the charge to "purchases/use of home" and then transfer the expenses from business current a/c to your personal a/c. Similarly, unless you have a dedicated business phone, fax, mobile or broadband, you can apportion your household "communications" bill between private and business use. Don't be greedy, and make a realistic judgement for business usage. You might want to analyse a couple of bills to asses just how much is business use then apply this for the future. If you rent your property, then you can apportion the rent. If you are buying via a mortgage, do not bother to try to apportion any charge, as technically you are introducing a fixed asset into the business - too messy. Although HMRC have the right to audit your claims, if you are fair and can show you have made every effort to record your expenses as accurately as possible, and not go over the top, they will be happy.