Tax Return - Self Employed Builder - Advice Required

[georgia694]

Hello all

I am completely a tax return for my boyfriend's company, for the first time every this year (eek). He is a self employed builder - a sole trader, so I am hoping it should be quite simple. I have one question. When calculating 'income' - should this be every payment received from a customer (e.g. including both payment for labour AND materials to complete the job), or just the money received for labour? If it is the former (including labour and the builders materials required for the job), then how do I ensure that the money spent on materials is not taxed??

Many thanks for any advice that can be offered.

Georgia

 

For a self employed trader income taxes are charged on annual profits.

The basic definition of profit is "Income minus Expenses".

The income is everything your boyfriend has charged for and invoiced. That includes all building materials on the invoices. This goes in the income section of the tax return

The cost of the building materials is an expense (as are any other allowable business related expenses). You put these on the tax return in the allowable expenses section.

The expenses are subtracted from the income to give a figure that is the profit for the year and it is the profit on which income tax is calculated.


I hope that makes sense..

 

[MyAccountantOnline]

As stated above the income is the total value of all invoices issued in the year.

 

[georgia694]

That makes perfect sense, thanks so much for the replies. To ensure I get the maximum tax relied, I plan to hire an accountant this year to complete the tax return for me - but hope to be able to do this myself once I've seen how its done!! Many thanks again, georgia