First Previous - Page 1 of 1 - Next Last

Self Assessment & sole trader who is Vat registered

  • 10 posts
  • # 114196

Hi All,

This is my first year in practice and I need some help with a couple of SA queries.

I do a clients VAT every quarter he is a sole trader earning below the threshold but it serves his business to be Vat registered. He would like me to do his SA. Am I right in thinking his SA will be just on the Income or Drawings he has taken from his business plus any other earnings, rather than the tax due on his profits? basicly the same as a director of a limited company? 

I also have another client who has taken a tax free lump sum from his private pension this year. I have been online and cannot find any advice as to how this is declared on his SA. One post said if it's tax free you don't declare it! but that just didn't sound right.

Any help would be greatly appreciated.

KW

  • 17 posts
  • # 114201

Hi Karen

Sole traders are taxed on their profits.  Their drawings are not included in the expenses of the business.  Directors of Ltd Cos are taxed on what they extract from the business (salary/dividends/BiKs) - the business also pays corporation tax on its profits.

The ICB have a separate course for self assessment that has to be done before you can complete tax returns for your clients.  Once you've completed it you have to write to HMRC for an agent code for self assessment, which can take some time to come through.

As a suggestion, maybe someone in your branch (or a local accountant) can help you out with these this year, and then by the time they are due to be submitted for the 16/17 tax year you will be set up to do them.

Kindest regards

Christina

  • 10 posts
  • # 114203

Hi Christina
Thanks for the reply.
I am already registered as an agent with HMRC My clients so far have been pretty standard both sole trader & Ltd company directors. My hubby & son both have Ltd companies. The only reason for the query is this is the first client I have had who is a sole trader who is registered for Vat.
I just wanted to know if their SA was treated any differently to a standard Sole Trader as he has had both paid Vat and had Vat reclaimed this year.
Thanks for the info ref the level 3 SA diploma I have the text book just didn't want to plow through it for the answer lol thought this might be quicker.
Karen

  • 17 posts
  • # 114206

Sorry Karen, I read your first question as 'do sole traders get taxed only on their drawings' and so assumed you didn't know what you were doing!  I was trying to be tactful in my reply but I'm not always successful.

I'm afraid I can't help you with the pension question, I think I must have only done taxable lump sums on the ones I've filed.

Christina

First Previous - Page 1 of 1 - Next Last
bottomBanner
loading