Tax question

Discussion in 'Other Trades Talk' started by Ian Goodchild, Sep 9, 2015.

  1. Ian Goodchild

    Ian Goodchild New Member

    Hi guys,
    I hope I am in the right place to put this!

    I have started my own business a year ago as a handyman and all is well. Whilst talking to a book keeper I was working for she has advised me to keep a hold of receipts for materials I purchase and put them through for tax reasons but I cant seem to get my head around what she was saying.

    Currently I charge for my labour only and any materials I buy I just hand over the receipts and they reimburse me for them - pretty straight forward and some might say stupid as I see that tradesmen put a percentage on top to cover getting the materials from stores and diesel and so on. The reason I don't quote for materials on the spot, as they look at me with their devilish eyes, is because I don't know the prices off the top of my head and I feel as though I could shoot myself in the foot and undercharge myself and I am the type of person to swallow the cost than to think they may be thinking I might be ripping them off. Probably because I am new to the game I guess.


    Any ways back to the question, say I charge £100 labour per day and the tax man wants his bit of £20 for all my hard work that leaves me with £80 on top. If I include receipts of £50 so therefore the job that the tax man see's is now £150 he the now wants £30 tax off me, as the £50 of materials were to do the job does that £50 cancel the tax of £30 that I should pay as a business expense.

    I hope someone can shed some light on this for me and give me a little guidance.

    Regards
    Ian
     
  2. parahandy

    parahandy Screwfix Select

    Labour charge
    + what you charge for materials
    - actual cost of materials
    = your taxable profit.



    You won't pay 20% on that though as you will have other deductable expenses and you also have an allowance of about £10.5k per year before you start paying tax.
     
  3. Astramax

    Astramax Super Member

    The customer is not doing you, you are doing yourself. As Para said £10.5k before you pay any tax also you will be required to pay national insurance. You will also require a liability insurance, keep receipts for everything, petrol, tools, materials, work clothing etc even sandwiches whilst working these are just a few things that are allowed against income tax.
     
  4. Ryluer

    Ryluer Well-Known Member

    If you are getting paid in cash don't declare it.
    I get paid with materials sometimes or livestock as I own a small farm so no paper trail for the tax man to follow.
    Get my drift?
     
  5. KarimiumCom

    KarimiumCom Member

    lol, no wonder tradesman are investigated with extra scrutiny by tax inspectors.
     
  6. nigel willson

    nigel willson Screwfix Select

    expect a knock on the door shortly
     
  7. Ryluer

    Ryluer Well-Known Member

    I get knocks on the door regular. Futile exercise though.
    What you don't get paid can't be taxed.
    Blokes on here have a hard time getting their heads around that. [​IMG]
     

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