Tax & Receipts

[Wirksworth13]

Really confused and also concerned. We started advertising our property in January of this year and I have kept all our receipts for everything but wonder if I need to do this. I have kept all the receipts for the things I buy for the welcome pack, cleaning materials etc. but I remember reading here, someone said they had an allowance of £X for laundry etc etc...... Do I not need to keep and log these receipts and just claim an allowance?
I also woke in a cold sweat this morning, thinking I had got all mixed up with Tax Years! Worried now and can't get my head around it. April 2015 - March 2016 - Thought I registered October 2016 and had to file tax return Jan 2017, have now confused myself that much that I can't understand how I worked that out.
Would some kind soul please confirm this to me or point me in the right direction. Thank you so much for all the help I have received from this forum

[Joanna]

For 2015-2016 tax returns the deadline is January 2017 but I would never leave it that late. If something came up and you ended up missing the deadline you would get fined.

I aim to get everything to my accountant before the schools break up in mid July. If I don't manage that then it'll be September. But then he also does my husbands business accounts and because we share ownership of the cottages he needs the cottage accounts to work out OH's tax liability. They usually get their stuff to the accountant in June. This is partly because the accountants get really busy towards the winter with all the people who have left it to the Autumn to get their accounts in.

I recommend getting an accountant to look over them for you at least for the first year - it needn't cost a lot and there may be expenses you didn't realise you could set against the income.

I don't send him receipts, just a spreadsheet with everything itemised. I do keep most of the receipts just in case there was ever any query from HMRC, but It's probably not essential to keep every last one - that's just me

[greenbarn]

I have kept all the receipts for the things I buy for the welcome pack, cleaning materials etc. but I remember reading here, someone said they had an allowance of £X for laundry etc etc...... Do I not need to keep and log these receipts and just claim an allowance?

If you pay for laundry and are invoiced, keep the receipt and enter the amount. The confusion may be that some of us do our own laundry, so estimate the cost of electricity consumption, and arrive at a figure to claim for that; no point in claiming for your own time. That's what we do; there's no receipts of course, but I can justify the approximate figure. We buy washing liquid etc in bulk and have receipts for that. Our accountant never gets to see receipts, but they exist and are filed by month in case we ever get investigated by some bored little herbert at the Revenue.
There are particular allowances you can claim such as use of home for office, which I think is a fixed amount of not much but better in your pocket than the taxman's. Your accountant should be well up to speed and able to advise, and familiar with the specialist area of FHLs.

[russellt]

I also woke in a cold sweat this morning,

You poor soul. Importantly, you sound like you're trying to do the right thing from the outset. So, don't get too worked up about it. I recall being in your situation when we started. We started in the December, incurred expenses and capital costs in Jan/Feb/Mar, took bookings and deposits in Mar for holidays which were to be taken in Jun, ie the next tax year.

So, we had incurred costs in that tax year, and had taken bookings and deposits, but none of the bookings had actually been fulfilled during that tax year. But we had taken receipt of cash deposits.

We got soooo confused about whether we should recognise the bookings or apportion the costs, etc, etc, in the tax year and how we should handle capital allowances and expenses. And also how to record things in our tax returns.

The important thing is that you keep a record of everything as a simple month-by-month receipts & expenditures spreadsheet. Then, as Joanna says, find a friendly accountant who will help you through the first year, help with capital allowances, explain what to do with losses, etc - we didn't, and got into a bit of a pickle.

However, the mistakes we made, which were never likely to cause the UK economy to implode , were simply corrected in the next tax year.

We are now in a similar situation to Joanna, in that we have another business, so our accountant now ties everything together for us each year. That said, he doesn't see any FHL receipts, so my spreadsheet of income and costs is important and the ability to substantiate any expenditure from receipts or other reasonably argued rationale for a non-receipted expense, is crucial.

So, when greenbarn's Revenue 'herbert' comes along(if it ever happens!), you can look him/her in the eye and explain your rationale for everything.

[zebedee]

I have all receipts in a folder filed by months. The folder goes to the accountant but I have no idea if he has ever looked at it before it get passed back.

Another folder with bank statements, personal stuff etc also goes to the accountant and he does go through this.
Spread sheets list all the in comings and outgoing.

Others may do it more simply, but it works for me and the accountant so that's all that matters

[Essar]

Like everyone else I log all my receipts, income & expenditure and give that to the accountant to sort out the tax return. I keep all receipts in a box for each year. I would leave it to Herbert to match them up to the log with just the advice that the most recent are on the top!

[newtimber]

Like everyone else I log all my receipts, income & expenditure and give that to the accountant to sort out the tax return. I keep all receipts in a box for each year. I would leave it to Herbert to match them up to the log with just the advice that the most recent are on the top!

Unfortunately, Herbert will choose a few payments that he thinks look suspicious and ask you to produce just those receipt(s). It is you who has to look through the box to find them.

[ManxRed1]

Can I ask how much people are paying for the accountants' services?

I have a spreadsheet with all ins and outs, but my receipts are a bit higgledy piggledy. Some are files on my computer, some are paper, some are available as downloads (e.g. BT Bills), so that would take some effort.

But it's all in the spreadsheet.

[Nemo]

I make a point of filing all my receipts, printing emails off, copying CC statements if needs be. I have a folder and staple small receipts to A4 paper and hole punch all the rest. If Herbert ever comes to me, I don't need the stress of trying to prove that I have the receipt somewhere. It's been useful as there have been numerous occasions when I've needed a receipt to claim a refund of some innocuous item. I sound really organised but the challenge is doing that regularly for every receipt. It does get done a minimum of once a year though.

[Robin S]

I use https://www.expensify.com... free for non serious use and a mobile app that allows you to take pictures of receipts and classify if you don't want to keep mountains of paper receipts kicking about.

[Casscat]

Your link's broken Robin.

[akwe-xavante]

I keep all receipts and statements etc filed by month, each in a brown A4 envelope which I keep together as a set each years end and I have an annual excel workbook comprising of 13 spreadsheets to do all my calculations for me for the purpose of submitting my own online self assessment each year. 12 sheets, one for each month, each carries data over into the next month and onto sheet 13 where all the hard work is done calculating the figures I need for self assessment at the end of the year.

The workbook took me a couple of weeks to workout, several packets of Paracetamol, several bottles of brandy and a few sleepless nights but I now have a workbook as an annual template that I use each new year.

No accountancy fees.

A business doesn't get much simpler than a single holiday rental as far as taxation is concerned.

On the occasions where I've gotten stuck with something I phone the inland revenue for help and advice and I've always had a satisfactory answer that I've understood "in the end".

I actually have three small businesses each of which I keep completely separate from each other as regards to bank accounts, statements, bills and receipts etc. Each having an excel workbook of its own. At the end of each financial year I add together all those figures required from each workbook and do a single online self assessment submission. I have a vehicle that gets used for all three businesses, How do I apportion a part of the expenses to each business? Inland revenue said don't just put the whole vehicles expenses through just one of them each year, the same is said for any other expense that is incurred and shared across the various businesses.

Over the first few years I made many calls to the inland revenue for help and advice, its free and up to date and from the horses mouth. It got scary for a while when people at the call centre recognised who I was within just a few words of asking my question!!!!!!

[newtimber]

A business doesn't get much simpler than a single holiday rental as far as taxation is concerned.

Not entirely true. The main problem is the allocation which financial year the receipts and payments relate to. Some are received in advance for a holiday to be taken the following year and some are received in arrears after people have finished their holiday. Then you have capital allowances to claim for things that aren't repairs. Then probably you use part of your home phone and computer etc for the business use and some for personal use... Maybe you then use some weeks for personal use and have to calculate number of weeks actually let commercially...

[akwe-xavante]

Not entirely true. The main problem is the allocation which financial year the receipts and payments relate to. Some are received in advance for a holiday to be taken the following year and some are received in arrears after people have finished their holiday. Then you have capital allowances to claim for things that aren't repairs. Then probably you use part of your home phone and computer etc for the business use and some for personal use... Maybe you then use some weeks for personal use and have to calculate number of weeks actually let commercially...

These issues are very simple ones to overcome there are far more complex issues to overcome when you become VAT registered and have purchases and sales at different VAT rates and employ people and have PAYE problems and pensions etc etc to deal with too. A small sandwich shop employing one person only is far more complex.

"The main problem is the allocation which financial year the receipts and payments relate to" this depends on whether your accounting method is Cash based or Accural based, there are pros and cons for either system and you have a choice.
A Cash based system is simpler, your suggesting an Accrual based system, unnecessarily complex in my opinion as at the end of day over the years and final year you pay the same amount of tax whichever of the two systems you choose.

A Cash based system of accounting works for me and its simple, you pay no more or less tax in the end.

All small businesses have the tiresome problem of proportioning out what is business and personnel use of bills etc, these are not difficult to work out with a little common sense and a little simple maths. All businesses have capital allowances to claim for things that aren't repairs or otherwise again a little common sense and a little simple maths sorts it out.



CASH BASIS

Accounting records prepared using the cash basis recognize income and expenses according to real-time cash flow. Income is recorded upon receipt of funds, rather than based upon when it is actually earned; expenses are recorded as they are paid, rather than as they are actually incurred. Under this accounting method, therefore, it is possible to defer taxable income by delaying billing so that payment is not received in the current year. Likewise, it is possible to accelerate expenses by paying them as soon as the bills are received, in advance of the due date.

ACCRUAL BASIS

A company using an accrual basis for accounting recognizes both income and expenses at the time they are earned or incurred, regardless of when cash associated with those transactions changes hands. Under this system, revenue is recorded when it is earned rather than when payment is received; expenses are recorded when they are incurred rather than when payment is made.