Expenses help please!

[Bridget1968]

Hi



Im just looking for confirmation on both points really:
If I use my mobile purely for business on a pay as you go basis, I can put the whole expense through my business ( soletrader ) or apportion a percentage if I do use it personally sometimes???
If I pay out of my business funds an amount into a child trust fund each month can I also deduct this from my profits at year end?
I did not put any of the above expenses through my accounts last year therefore would I legally be able to claim these back in this tax year if the answer to questions 1 and 2 is YES?
Thanks for any comments.

[RAL]

Hi




Im just looking for confirmation on both points really:
If I use my mobile purely for business on a pay as you go basis, I can put the whole expense through my business ( soletrader ) or apportion a percentage if I do use it personally sometimes???

Only business related calls cost you can put through. You can not deduct private usage calls cost from your profit.



If I pay out of my business funds an amount into a child trust fund each month can I also deduct this from my profits at year end?


No, the in order to deductible for the tax purpose, the cost/expenses have to be wholly and exclusive for the business purpose.


I did not put any of the above expenses through my accounts last year therefore would I legally be able to claim these back in this tax year if the answer to questions 1 and 2 is YES?
Thanks for any comments.

For No. 1 yes.

[Bridget1968]

Thanks for the reply Ral it is much appreciated.

I dont mean to sound confusing but I thought if you contributed to a pension or ctf then this was deducted afrom your profit and you didnt pay tax on them.

???

[RAL]

In a broad term you do get tax relief for the contribution into pension scheme either deductible as a expense when calculating profit and or vi self asessment form. But AFAIK CTF is not deductible expense for the tax purpose.

[David Griffiths]

Thanks for the reply Ral it is much appreciated.

I dont mean to sound confusing but I thought if you contributed to a pension or ctf then this was deducted afrom your profit and you didnt pay tax on them.

???

For a sole trader pensions are not a deductible expense. In fact you get tax relief directly from the pension company as you pay the contribution net of 20% tax, and the pension company claims that from the government. If you are a higher rate taxpayer, the higher rate relief comes via your self assessment return.

Payments to child trust funds are not a business expense, and cannot be deducted for tax purposes.

[Bridget1968]

Thank you for the clarification on this, I am obviously getting confused between ltd companies and sole traders.. i must gel up on this abit more but better to ask rather than get it wrong.

[David Griffiths]

Just to clarify, payments to child trust funds can be deducted as an expense by a company as part of the director's remuneration, but it is subject to full class 1 NIC, and the director will be taxed via form P11d, so you may as well pay it as salary.

Provided that the payment is correctly set up as an employer's contribution, the company can make payments to a director's personal pension fund but the company will pay the gross payment, not the net payment that the director would make. The company gets tax relief via the CT return in the normal way. The company contribution is not subject to the same limits as an employee contribution - there are limits but they are much much higher.