Tax return first year (UK)

incognito · Apr 28, 2009

This year I have to fill in a tax return for non-writing reasons. I'm wondering whether I should including my writing business - the catch is, I've made no money!

I used to work as a freelance writer about ten years ago, then went into PAYE. Now I'm doing a mixture of PAYE and writing a novel which I hope to sell (yeah, right!). Since starting back along this track, I've been keeping a note of all writing expenses (trains to writers workshop etc). Should I put them all down in this year's tax return so I can carry the loss forward in the hope I will actually sell a book? Or should I wait until I make money in a future tax year and put in a couple of years expenses all in one go?

Filling in tax forms is never fun - I'd have to work out annoying things like expenses for use of home, claiming for computers etc - but if I have to fill in a tax return anyway, should I really tell the tax office about my writing now?

Please note, I am in the UK.

Ms Hollands · Apr 29, 2009

Euch. Tax. The good news is that if you have a business that's running at a loss, the government have announced a package that allows more tax breaks for loss-making businesses. Regardless, you should be able to offset your expenses against your business and reduce the annual tax you pay for non-writing work.

Of course, you have set up the business, right? So the UK government know about it, right? If not, then I'm not sure how you could claim any expenses and I'd recommend seeing an accountant to maximise your benefits, and to find out what to do about your loss-making business. I went to a local small business advisory office when I lived in Cambridge and they were really great in helping me set up a business. Good luck with it!

Jaycinth · Apr 29, 2009

I'm sure the UK has a website like the IRS that answeres every question.

However, if you were a US Citizen, and still at the point of subbing your work and haven't gotten paid, then, unless you have incorporated into a business structure, you are not really doing business, and therefore you are not a business. SRSLY, you can usually only offset losses(expenses) against income.

Believe me, if I could find a way to write off my laptop, printer, postage and books on writing...I would have.

incognito · Apr 29, 2009

Thanks for replies.

I haven't formally set up a business, as a sole trader there is no formality to go through. I haven't informed the inland revenue as I am not yet making money (supposedly, you have to do this within 3 months of earning, but for a sole trader, as long as you fill in a tax return at the end of the year, I don't think they care). I'm really looking at carrying the loss over to a future year where I might make a profit. I know I can't get tax back from other income by setting up a loss making business. (I have read that you can do this in America, though, which seems like a ginormous loophole.)

Could I wait and declare last year's writing expenses as part of next year's tax return, if I make any money next year? I know, as an "author", you can spread your tax liability across several years because of the way authors get paid.

There is an Inland Revenue website, but it doesn't answer this sort of question. I'm just too d***ed awkward for that!

Tasmin21 · Apr 29, 2009

I am in the US, so take this with a grain of salt, but my accountant advised that I save up all my expenses from last year (when I made no money) and put them in with this year's expenses (since I expect to make money this year) and it will all go under the category of "start up costs".

MaryMumsy · Apr 29, 2009

Either call and speak with someone at Inland Revenue, or call a Chartered Accountant. The CA might be your best bet. It would even be worth paying a consultation fee to find out what you are legally able to do, and legally required to do.

MM

Ms Hollands · Apr 29, 2009

incognito said:
Thanks for replies.

I haven't formally set up a business, as a sole trader there is no formality to go through. I haven't informed the inland revenue as I am not yet making money (supposedly, you have to do this within 3 months of earning, but for a sole trader, as long as you fill in a tax return at the end of the year, I don't think they care). I'm really looking at carrying the loss over to a future year where I might make a profit. I know I can't get tax back from other income by setting up a loss making business. (I have read that you can do this in America, though, which seems like a ginormous loophole.)

Could I wait and declare last year's writing expenses as part of next year's tax return, if I make any money next year? I know, as an "author", you can spread your tax liability across several years because of the way authors get paid.

There is an Inland Revenue website, but it doesn't answer this sort of question. I'm just too d***ed awkward for that!

Errrrr, if you're a sole trader, there IS formality you need to go through, unless they've changed that in the last three years. This is the type of business I had, and I needed a separate bank account and a letterhead for both the bank and to inform IR. Seriously, don't listen to any of us on here really (apart from the following!): you need to get advice from someone who does this for a living for the full answer. There are free services out there that are happy to advise you over the phone on stuff like this. Take it!

Polenth · Apr 29, 2009

If it's not on their website, you really need to see an expert.

But for anyone with simpler tax situations who might find this thread later, http://www.hmrc.gov.uk/ deals with income tax.

incognito · Apr 30, 2009

I'm obviously not going to pay an account for this sort of thing when I'm not making any money.

When I freelanced before I didn't notify anyone. I just filled in a tax return at the end of the year. I had an accountant back then. Waste of money.

Just thought someone here might know because they've been through it, that's all.

The tip about start up costs is great, thanks.

Priene · May 1, 2009

I'd probably plump for saving up the expenses and deducting them as start-up costs when you make some money. If you go the other way it could be difficult to justify if the Rev decides to pay you some attention.

Tax return first year (UK)

incognito

Ms Hollands

Cow lover

Jaycinth

Your Cuddly Sociopathic

incognito

Tasmin21

They will come from below...

MaryMumsy

the original blond bombshell

Ms Hollands

Cow lover

Polenth

Mushroom

incognito

Priene

Out to lunch