Expenses question...

[northernweb]

Hello

I am a recent sole-trader and as such am not registered for VAT. I have been saving receipts and invoices for business expenses - despite not being VAT registered am I able to claim back the tax on these business purchases?

Sorry for asking a newbie question - I've just never had this clarified!

 

[elaine@cheapaccounting]

If you are not registered for vat you cannot claim the vat back.

However you can claim them as expenses against your business income. So do keep all receipts.

You will need to do a profit and loss account and a self assessment at the end of the year.

 

[northernweb]

thank you for the response. what exactly are the benefits of claiming against my business income (referring to profit, not turnover i assume...)

thanks again

 

[elaine@cheapaccounting]

income - costs = profit

in your case income tax is paid on the profits.

So if expenses reduce profit then there is less tax to pay.

You might want to have a read of this:

http://www.franklyaccounts.co.uk/gettingaccounts.php

and this:

http://www.franklyaccounts.co.uk/gettingtax.php

Good luck

 

[northernweb]

ahh, of course. i understand - thank you very much for the clarification!

 

[elaine@cheapaccounting]

easy once you know how