Maximising use of expenses on low earnings

Maximising use of expenses on low earnings

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In preparing my Self Assessment return for 2012-13, I have a mixed year of employment with 3 months employed paying PAYE, 3 months unemployed and 6 months self employed (ongoing).  After adding up my earnings for the year and starting to deduct legitimate business expenses (as a Private Hire Driver) I soon drop below the £8105 Personal Allowance level and still have a significant amount of expenses to include. e.g. % of home use as office space, computer, mobile phone, SatNav purchase etc.  Obviously including these expenses will have no benefit to me as I’m not due to pay any tax below the PA level.  Can I defer these additional expenses and look to use them in future year(s) as my earnings will likely be greater or possibly use against previous years’  tax payments ?  Could the purchase of a computer & SatNav be treated as Capital Assets to help in this situation ?  Or, do I include them into my assessment and show some form of "loss" to carry forward ? Thanks

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By johngroganjga
19th Jan 2014 11:59

You can't carry forward anything other than a loss on your self-employment. But you don't seem to have made a loss - just not made enough profit to use your personal allowance. If you have written off fixed asset purchases as revenue expenses, your profit is actually higher than you think. You are entitled to capital allowances on your fixed asset purchases, but you are not obliged to claim them. If you disclaim capital allowances this year you willl be able to claim more allowances in future years, when hopefully they will be of more benefit to you

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By cbp99
19th Jan 2014 16:09

You may find


that it helps if you prepare accounts to a later date in 2013 and take the appropriate proportion of the profit to your 2012-13 SA. Eg prepare accounts to Sept 13 and take 6/12, or Dec and take 6/15. If profits increased in later months, you can spread these so that the 12-13 proportion is higher than just looking at the 6 months in 12-13 in isolation. See HMRC helpsheet 222.

And as has been said, Capital Allowances can be deferred.

Don't forget to include JSA (if any) on the return.

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Stepurhan
By stepurhan
19th Jan 2014 16:46

Deferring capital allowances

Capital allowances can be deferred, but the 100% annual investment allowance cannot. Whilst it is still likely to be worthwhile doing anyway, don't claim 100% on purchases this year when you do next year's accounts.

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By johngroganjga
19th Jan 2014 17:21

Tha above does not mean that you lose any allowances, just that you have to spread them over a longer period. Any expenditure on which you could have claimed AIA this year, will be eligible for WDA only next year.

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