Quick Book Keeping Question

captainlockheed · Aug 15, 2010

Hi guys I am a sole trader (Tiler) the vast majority of my work is domestic. I recently did job for a friend who asked me to buy his tiles at trade price for him. I don't supply tiles for my clients (too much hassle) so i'm wondering how to show the receipt of monies for the tiles on my spreadsheet.

Basically my question is if i show it as income I'll be taxed at 20 % so what column should i include on the sheet for the sale of tiles to my client and how does it work ?

Thanks in advance

The Cap'n

Williams lester · Aug 15, 2010

How will you be taxed on this if the income (from the tiles) and the expense (cost of the tiles) are the same?

captainlockheed · Aug 15, 2010

Sorry I should have said that, yes I did it as a favour as i was tiling his bathroom for him. So it was a neutral transaction same in as went out but i was thinking that the money is in the income column I'll pay 20% tax on it - so what to do ?

Williams lester · Aug 15, 2010

You pay tax on profit not income.

Matt Knight · Aug 15, 2010

Doesn't this qualify as a disbursement? The qualifying rules for a disbursement are vast and are listed on the HMRC website. Basically, I think it is when you pay for something on behalf of a client that isn't part of your service to that client, my memory is hazy so I suggest looking at HMRC website, if it qualifys then you can just net them off somewhere in a suspense or sundry debtor a/c.

captainlockheed · Aug 15, 2010

ok so i just show it as money in and as it's not more than what was spent on tiles i won't pay tax on it effectively !

I find it hard to get my head around these things sometimes

Thanks for the help

Williams lester · Aug 15, 2010

You will probably benefit from using an accountant, you may well find that they will be able to save you more than they cost because they can suggest claiming expense which you may not even know about!

captainlockheed · Aug 15, 2010

Thanks for the info guys !

Matt Knight · Aug 16, 2010

Absolutely, no tax implications. Dave is right, sounds like you could benefit from an Accountant

elaine@cheapaccounting · Aug 16, 2010

Have a read of this:

http://www.cheapaccounting.co.uk/blog/?p=153

explains about profit etc

captainlockheed · Aug 16, 2010

thanks very much big thumbs up !

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