john banks

Quick question: If you are to be taxed under Schedule D (ie as a GP in a partnership) and an expense is designated as "tax deductible" does that mean that 100% of the expense is deducted from your tax bill, or does it simply mean that you get tax relief on the expense which I take to mean you recover your marginal rate of income tax on the expense - ie 40%? Obviously one means that the expense costs you nothing and the other means you effectively pay 60% of it.

Thanks!

Puff The Magic Wagon!

iTrader: (2)

Depends if you gain a benefit ( as in personal) from it.

Best thing to do is to put all the figures down & let IR work it out. It is a fallacy that they won't do it after September 30th as what are they going to do if someone submits accounts on 30th Jan & hasn't come to a conclusion They have to work it out

(Advice from IR 2 years ago)

smartie

Its the latter - you get relief at your taxation rate (40% etc)

Also, yes the IR rev will calculate your tax after 30/9, they don't say they won't. The point is though that the tax fall due on 31 Jan, regardless of whether you know how much it is, so if you underpay you will incur interest.

Definantly see an Accountant, although IR will work out your tax, they don't always consider your best interests; not deliberatly, they just do it as they see it with littlew thought of saving tax!

Tim Skerry

I agree it is worth getting an accountant to do your return if you are using schedule D. I think the second is right. You can get relief from tax for certain things, but it is hard to see why HMG should pay for them 100%!
An accountant will advise you about expenses that you incur in the course of your job that are necessary for it and that you would not think of claiming.
For example,
Clothing/footwear allowances (depends on the job)
Scientific /medical journals - to keep up to date with developments in the field.
Meetings/conferences for CPD etc a/a
Use of home as office.... if you manage your self employment from there, claim this, but not more than 10% or you will incur problems with capital gains if you sell. This may include a share of bills too.

Bas

Any allowable expenses are a deduction from taxable income. You therefore save tax at your marginal rate i.e. 10%, 22% or 40%

Dealing with the Inland Revenue on a daily basis as I do, a lot of the people there are completely useless so it's definitely worth seeing an accountant...but then I would say that wouldn't I

Seriously though apart from the tax calculation itself the self assessment forms are a complete nightmare to fill in for anything other than a basic return and the Revenue can sometimes be incredibly picky about the smallest error or omission mening it takes longer to process the return.

Bas