Form 11 Help please?

boatbuilder

Hi,

I'm filling in my loooong overdue form 11 tax return and I have some questions.

My situation is....

I'm a paye employee but I also have a small sole trader business.

Let just say I earned 40000 gross in my paye earnings for a certain year.
In the same year, my business made a net loss of 6000 euro.

What tax implications does this have? Can I claim anything back from the paye tax that I already paid for that year? I also have capital allowances to take into account on a van and I'm not sure how to deal with it.

If someone could give me some pointers on these issues, that would be great!!

Thank you so much...

David

Dan Chipowski

boatbuilder wrote: »

Hi,

I'm filling in my loooong overdue form 11 tax return and I have some questions.

My situation is....

I'm a paye employee but I also have a small sole trader business.

Let just say I earned 40000 gross in my paye earnings for a certain year.
In the same year, my business made a net loss of 6000 euro.

What tax implications does this have? Can I claim anything back from the paye tax that I already paid for that year? I also have capital allowances to take into account on a van and I'm not sure how to deal with it.

If someone could give me some pointers on these issues, that would be great!!

Thank you so much...

David

You can elect to have the trading loss set against your other income, which will result in a refund, more than likely. You will see the relevant section on the F11 you are filling in where it asks you the amount you wish to offset.

The Capital Allowances on the van (assuming it's used solely for the business) will be at 12.5% per annum on the cost. (Maximum allowable cost is €24k if it was bought after 1 July 07). The capital allowances would decrease the tax adjusted profit, or in your case you can add them to the loss.

That's a very brief overview of a few of the main points you asked about anyways.

boatbuilder

Thanks a million for your help!

I'm going to try to tackle form 11 myself.

My business is actually training people how to use accounts systems (Sage) but its amazing the things that I don't know about the tax return end of things!

boatbuilder

Well I think I'm making a bit of progress here.

I have some more questions though!

Drawings - is this simply the overall amount of money taken in or out of the business bank account for the year in question?

ESB / Heating - How do I figure out a percentage of my ESB bill and home heating bill to put into my accounts? Seems like a gray area.

Thanks again

crazzzzy

Drawings are the money you take out of the business for yourself or if you have paid personal bills from the business if its a soletrader. Any money put in is capital introduced.

Mr. Incognito

hmmmmmmm.

I'd normally advise you to seek professional help but if your trade is loss making and your PAYE is deducted at source I would have a stab at it yourself as the issue of penalties and interest will not arise.

When you do however start making a profit on the trade- employ a professional to ensure the losses carried forward are off set correctly. It'll probably cover his fee.

boatbuilder

Thanks,

I have submitted the return online and I think I worked everything out...

I've put the losses against my paye income for the same year, so a refund will be coming my way soon.

Would I be right to presume that no preliminary tax is due for the following year, because of the loss of the previous year?

alexiadexia

There's a good guide on the revenue website. Think it's called "a guide to completing you return of income". If that doesn't help go to your local Revenue office.. Don't pay an accountant as they're crap anyway..

AccessQuery

boatbuilder wrote: »

I've put the losses against my paye income for the same year, so a refund will be coming my way soon

I'm not sure that the revenue will allow you offset losses in your trade/sole trader business against PAYE income you have. At best the loss making sideline business you have will not incur any additional tax.

boatbuilder wrote: »

Would I be right to presume that no preliminary tax is due for the following year, because of the loss of the previous year?

The preliminary tax you pay is in essence a pre-tax you have to pay on the following years income. I've been told by ROS on-line tax assistant that as long as something is paid as a preliminary tax you'll be in compliance with the ROS on-line rules and won't be charged interest etc if profits are made.

I'd suggest you pay even 50 or 100 euro as a preliminary tax even if you think no profits will be made with the sole trader element of your income. It'll come back to you as a credit anyway.

The key issue that the ROS person highlighted to me was that as long as a preliminary payment is made no matter what it is you'll be in compliance with the ROS on-line rules.

You should have a chat with your local Revenue office about the above. If it's still not clear I'd advise you have a chat with an accountant. Shouldn't cost that much and anyway you can put the bill down to prof' fees on your next ROS return!

Don't overlook the obvious though, if you continue to make losses in your sideline business stop dong it!!!!

Best of luck.

Legend100

Access, that ROS person didnt have a clue what they are talking about as there are strict rules with regards to paying prelim tax whether it is online or not. You must pay 100% of last years liability or 90% of this years (estimated)

Since the person was making a loss, no prelim would be payable as PAYE income should be taxed correctly by his/her employer

dbran

Legend100 wrote: »

Access, that ROS person didnt have a clue what they are talking about as there are strict rules with regards to paying prelim tax whether it is online or not. You must pay 100% of last years liability or 90% of this years (estimated)

Since the person was making a loss, no prelim would be payable as PAYE income should be taxed correctly by his/her employer

Legend. You are spot on and you beat me to it

With all due respect to Accessquery, this is just terrible advice and totally incorrect. The folks in ROS and also at the Collector General's office for that matter are basically computer data entry people and burger flippers. They havent got a clue about tax and it's rules. They just record what has been paid by the tax payer, nothing more, nothing less.

Underpaying preliminary tax is a very expensive mistake to make as the interest is also back dated to when you underpaid it. Finding out that it is underpaid can take nearly 18 months.

Seek professional advise or you may find you will pay dearly. its as simple as that.

DB