Credit card purchases self employed

[Carl1991]

Hi all, I'm new to self employment (april) and use my credit card now and again but wondering if I'm able to put the purchases though my books? Ive heard it's fine, then others have said for instance if I only paid the minimum payments, that's all they'd account for in the year. I've no idea how it works, got no "info pack" or something like I was expecting from HMRC and told I don't get a tax bill till 2020. Can anyone clear up this credit card issue for me. Cheers

[jpbeaver]

Get an accountant to sort it all for you. They will save you more than they cost you.

[donnk]

yes you can its fine.

 

When you record the purchase on your books, mark it paid and add it to the account 'Your cash' or similar to make it easy to keep tabs.

 

I can 100% recommend www.clearbooks.co.uk it does it all for you.

[Inoff the Red]

1 hour ago, Carl1991 said:

 

Hi all, I'm new to self employment (april) and use my credit card now and again but wondering if I'm able to put the purchases though my books? Ive heard it's fine, then others have said for instance if I only paid the minimum payments, that's all they'd account for in the year. I've no idea how it works, got no "info pack" or something like I was expecting from HMRC and told I don't get a tax bill till 2020. Can anyone clear up this credit card issue for me. Cheers

 

Have you told HMRC that you are self employed? Have they issued you with a UTR number (unique tax reference)? That notification usually comes with a leaflet advising what you need to do to manage your tax affairs. They also send out periodic reminders of self assessment deadlines.

 

HMRC will expect you to know what the requirements are for filing tax returns etc. The HMRC web site does give some pointers if you search business start ups. If you get stuck or want a quick chat about what you need to do, send a PM with your questions and email address/mobil number and I will answer them. 

 

As for the "advice" given to you about business  items purchased on your credit card, the suggestion that there is a restriction on what you can claim against tax if you only make minimum payments on your CC is absolute nonsense. If you buy a business item on a credit card you have incurred a liability, how you choose to discharge that liability is your decision and it does not affect what you can claim as a business expense. Using a credit card is just a different way of financing your business. You could have chosen to use a bank overdraft, HP or loan. 

 

 

 

[Carl1991]

That's cleared it up cheers. Yes all registered and received UTR number. And thats about it. I was expecting a load of stuff explaining when books go in, how you pay, what can and can't go though etc. I will use an account but just wanted some clarification as I'm going to be making some purchases on the card. Cheers

[kevinjohnsonmbe]

On 15 September 2018 at 10:16, Inoff the Red said:

Have you told HMRC that you are self employed? Have they issued you with a UTR number (unique tax reference)? That notification usually comes with a leaflet advising what you need to do to manage your tax affairs. They also send out periodic reminders of self assessment deadlines.

 

HMRC will expect you to know what the requirements are for filing tax returns etc. The HMRC web site does give some pointers if you search business start ups. If you get stuck or want a quick chat about what you need to do, send a PM with your questions and email address/mobil number and I will answer them. 

 

As for the "advice" given to you about business  items purchased on your credit card, the suggestion that there is a restriction on what you can claim against tax if you only make minimum payments on your CC is absolute nonsense. If you buy a business item on a credit card you have incurred a liability, how you choose to discharge that liability is your decision and it does not affect what you can claim as a business expense. Using a credit card is just a different way of financing your business. You could have chosen to use a bank overdraft, HP or loan. 

 

 

 

Totally agree!  (for OP, ignore the next question, it's just a technical point which IOTR might have a view on but it's probably so insignificant an issue as to not make any difference to anything in the real world!)   

 

Supplementary question for IOTR....

 

Where personal credit card purchases result in 'other' rewards such as air miles, cash back etc, I'm guessing where these relate to business transactions on the personal credit card that they should be recorded as BIK...?  I know, some things are better just not asked ?

 

  

[Gary Prentice]

Yeah, some things are better not asked!

[openspaceman]

39 minutes ago, kevinjohnsonmbe said:

Where personal credit card purchases result in 'other' rewards such as air miles, cash back etc, I'm guessing where these relate to business transactions on the personal credit card that they should be recorded as BIK...?  I know, some things are better just not asked ?

 

  

A fitter at my last job always took vehicles to a BP fuel station 5 miles away whenever he got the chance rather than the local Texaco which tended to be 3p/litre cheaper so

 

1 he could skive off for longer

2 he got the nectar points

[kevinjohnsonmbe]

12 minutes ago, openspaceman said:

A fitter at my last job always took vehicles to a BP fuel station 5 miles away whenever he got the chance rather than the local Texaco which tended to be 3p/litre cheaper so

 

1 he could skive off for longer

2 he got the nectar points

Nectar points....   Forgot about that one but it was an issue with business travel in a previous job.  Folks were creaming the points in!  

[Inoff the Red]

1 hour ago, kevinjohnsonmbe said:

 

Supplementary question for IOTR....

Where personal credit card purchases result in 'other' rewards such as air miles, cash back etc, I'm guessing where these relate to business transactions on the personal credit card that they should be recorded as BIK...?  I know, some things are better just not asked ?

 

Kevin, trust you to lob in a curve ball!

The answer is that it depends on the circumstances (and even HMRC says that )

 

Have a look at this:-

 

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21618

 

With regards to nectar points on a personal card while the expense goes on a company fuel card, the employee is probably ok although the employer may justifiably be a tad peeved.

 

The credit card issue tends to get a bit tricky if the rewards accrue to a company credit card which are then distributed to employees (or as sometimes happens, the directors use the points/air miles for a holiday trip to some exotic location) because it would be difficult to argue that the reward was not linked to employment.

 

 

 

Quote

 

 

 

Edited September 16, 2018 by Inoff the Red