Business Brain

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Rennie

A: This is a common question. In relation to taxes, you will have to notify HMRC that you have started your business so they can register you as self-employed for national insurance and income tax purposes.

You will have to prepare a tax return each year to report income and expenses. You may also have to register for VAT purposes depending on your turnover.

You can claim tax relief for the use of a part of your house for business purposes, and so can claim for heat, light, insurance, decorating, phone, internet etc. Also any expenses related to an office you may use such as furnishings, computers and related equipment will also be considered when calculating how much tax you need to pay.

However, if you claim that a part of your house is being used exclusively for business purposes, you may have a capital gains tax liability on a proportion of any gain made when you sell your house in the future.

Costs incurred in the seven years immediately before a trade starts can be claimed as a business expense for tax purposes. They can be claimed as though incurred on the first day of trading, but only if they would have qualified as an allowable expense if they had actually been incurred on that date. Care must therefore be taken to ensure that the costs relate to the operation of the trade itself rather than, for example, deciding what trade to operate or training to allow you to work in a new area.

There is no monetary cap. Note the position for VAT purposes is different and depends on when you register for VAT.