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Post Info TOPIC: Tax free allowance - well under last year
Tom H P


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Tax free allowance - well under last year
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Hi guys,

I was just wondering, my brother in law started his own business last year, and his profit for the year was well below the tax free allowance. But because he's been doing his own accounts, he didn't allow for the fact that he had a debtor of 900 quid at the end of the year. He has subsequently included it in this years accounts.

What I was hoping to find out is - if he can prove that he completed the 900 quid work last financial year, can he subsequently reduce his profit margin this year for tax purposes? He's well above the tax threshold this year, but was well below last year, so I thought it would make financial sense if it was legal.

Also, he's accounted £200 per month as working from home costs in his accounts - surely thats totally unreasonable? I thought it was £3 a week?

Thanking you in advance,

Tom.

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Fay


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Hi Tom

The best thing to do (IMO) is for your brother in law to amend last years accounts to include the £900 debtor, and then resubmit his tax return to HMRC with the increased profit. He still won't be liable for any tax in the year, but it will mean his profit this year will be reduced, and be default so will his tax liability.

HMRC will allow £3 per week to be claimed without any evidence. Higher amounts can be claimed if they are justified. £200 a month does sound steep though hmm

 

 



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Tom H P


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Brill, thanks a load Fay. Thats cleared that up!!!

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