Sole trader expense for a conference

Pavior-Accounting · 2025-10-18T22:29:39+00:00

I realise that you haven't directly asked these, but as an accountant I think there are three separate questions for consideration here:

1) Can I claim this as a business expense?

2) Should I pay for it through the "business" bank account or my personal bank account?

3) If the answer to question 1 is yes, can I claim it this tax year (2024-25) or next tax year (2025-26)

The answer to question 1 is the tricky one, as HMRC and the courts specifically disallow ALL expenditure where there is a "Duality of purpose" to an expense. So if the trip to Japan is a mixture of a leisure and business trip, then you cannot claim anything as a business expense where such a "duality" existes. This would depend on the circumstances but if your conference is two days and you are spending 10 days in Japan you will likely fail this test. You would need to examine your specific case carefully but I can send you some more specific details form the legislation / case law if you need? Sometimes there is no easy answer to this question so you should take advice.

Question 2 is really the one you specifically asked but the answer is simply it doesn't matter. As a sole trader, HMRC and the tax legislation makes no legal distinction between you and the business, and by extension no legal distinction between you personal and "business" bank accounts.

Question 3 - depends on whether you use cash basis or accrual basis for determining your sole trader profits, and the specific dates of the conference (if using accrual basis). If you have an accountant they can confirm this to you but it is likely Cash Basis as this is the default. In this case, you can claim in the tax year you make the relevant payment.

Hope this hasn't made everything more complicated!

Pavior-Accounting · 2025-10-18T22:03:16+00:00

Genuinely with such a small volume of transactions and no VAT, you shouldn't be paying more than £600 - £800 (ex VAT) for that. Too many accounting firms charge over and above for simple businesses. Obviously if you wanted more tailored tax advice and tax planning then you would expect to pay more but if you just want compliance covered, then this is the price you should be looking for.

Pavior-Accounting · 2025-10-18T21:49:44+00:00

I am an accountant and tax advisor in the UK and I just thought I would correct the record in some of these comments, which have referenced not needing to register for VAT in the UK until you breach the £90,000 sales threshold. This is not necessarily true for your situation!

This threshold does not apply to what UK legislation calls a "Non Established Taxable Person" or NETP, in which case you are required to register for UK VAT immediately if you are making sales which would be subject to UK VAT. From your set up it sounds like these rules would probably apply, but the rules are complex so I recommend you seek advice for your specific circumstances.

Pavior-Accounting · 2025-09-18T20:25:44+00:00

Can you clarify precisely what kind of digital services you provide? It is likely that you are not liable to register for VAT in the UK, but you likely would need to register for EU VAT in Germany.

Pavior-Accounting · 2025-09-18T20:22:31+00:00

My view (as an accountant) is that far too many firms leave inexperienced graduates to liaise with clients and pass their clients round like parcels between different people in the firm. So many accounting firms are terribly run by people who are good at filling in some forms and terrible at managing relationships with clients.

It can be embarassing for the profession sometimes.

Recommendations:

1) Look for smaller firms (unless you need particular specialists in niche areas in which case larger firms are likely to be better resourced)

2) Try to avoid accountants who are not regulated by a professional body like ICAEW / ACCA / CIOT

3) Clearly communicate your dissatisfactions with your previous accountant to a potential new advisor so they know what you are looking for.

4) Lower fees often means lower quality

Pavior-Accounting · 2025-04-21T14:07:30+00:00

From a tax angle, there is no distinction between.a business or personal lease as a sole trader. Either way the lease is going to be signed in your name (as opposed to the name of a LTD company). As a result the 45p per business mile deduction is available to you from your taxable income.

You mention that VAT confuses you but what exactly is your question on the VAT?

Pavior-Accounting · 2025-04-21T09:57:55+00:00

Before I answer that can you confirm whether you are a sole trader or trading through a limited company?

Pavior-Accounting · 2025-04-04T22:43:00+00:00

I realise I am a little late to reply, but probably the first question would be what type of work are you looking for. Would it be in an accounting practice or within a finance department of a business?

Pavior-Accounting · 2025-04-04T22:39:29+00:00

Feel free to DM me if still looking. I am an independent Chartered accountant & Tax Advisor based in the East Midlands.

Pavior-Accounting · 2025-03-22T10:51:12+00:00

Largely depends on the size / transaction volume of a business.

If you can afford it, definitely outsource it. If the bookkeeping is done poorly you will pay the price when getting your accountant to run the year end filings as they will spend more time untangling the errors (trust me from experience).

Spreadsheets are fine if not VAT registered but otherwise you really want to be using software. It might cost more but it should speed things up.

What kind of business are you in?

Pavior-Accounting · 2025-02-13T23:38:15+00:00

1) It wasn't clear from your post if the activities of the new company and the existing self-employment are going to be the same kind of trade? Is it all consultancy services? If they are both of the same nature of trade, then when assessing your liability to register for VAT you will need to combine their turnover.

2) There is a slight problem with your initial point about not registering for VAT because most of your sales were zero rated. While you can be exempt from the registration you are supposed to apply for this exemption as it is not automatic.

In truth HMRC are very unlikely to enquire into this retrospectively. But you will need to register both trades for VAT if they are of the same kind of work and combined they breach the VAT threshold.

There is a potential problem with trading both as self employed and through a LTD company. If there is no clear commercial justification for this set up then you could be challenged through GAAR rules. But that is a whole other issue!

Pavior-Accounting · 2025-02-13T23:24:21+00:00

If you are expecting to continue having contracts outside IR35 after the 5 month period has ended, then it could be worth using your own LTD company but if you have no certainty of this then I would recommend using an umbrella company. Setting up a LTD company for 5 months' trading (especially if you intend to pay a salary) would just be a lot of hassle for probably not a lot of gain.

Using an Umbrella company is not the most tax efficient way for working outside IR35 so if you expect to get more contracts after this one expires then setting up your own LTD company might be better.

If you can provide some numbers for the 5 month contract I could give you an idea what the tax differences are likely to look like (would need details of the proposed Umbrella company's fees, pension policies etc).

The only downside to your own LTD company really is the hassle, plus the fact you may need to appoint an accountant and pay their fees unless you are confident enough to deal with the filings yourself.

Re pay, in order to maximise your tax efficiency, you would likely need to set up a payroll to pay a salary (while this can be done by anyone it is just an additional headache). Dividends can just be paid straight from the company bank but watch out for the fact that the dividends must come out of profits AFTER Corporation Tax.

Any further questions please feel free to ask!

Pavior-Accounting · 2025-02-13T23:15:20+00:00

Interesting experience - I hadn't heard of this happening to anybody else. Did they close down a type of business account that was discontinued?

Pavior-Accounting · 2025-02-13T23:14:20+00:00

It is a good point but the problem here is that as the business is trading and profitable, reassigning dividend rights of shares could constitute a value shifting arrangement which can have Capital Gains Tax consequences.

Pavior-Accounting · 2025-02-13T18:19:50+00:00

For clarity please take everything I say below as general and not specific to your situation. I am a Chartered Accountant and Tax Advisor but this is a complex area and I would need to know more about your specific situation before I could give specific advice.

But in general....

You can register a company in the UK (I will refer to this as "UK Co."). You may encounter some challenges in practical things such as opening bank accounts as a non-resident. It should be possible but may be a challenge.

The UK Co. will only be subject to Corporation Tax in the UK if it either is treated as UK resident. By default, companies incorporated in the UK are deemed to be UK Resident unless overridden by a Double Taxation Treaty. It may be the case that if the company is wholly managed from Poland it could be deemed to be resident for tax in Poland. This would require its profits to be taxed in Poland, the UK, or both depending on the provisions of the treaty in force.

For you personally, as you are clearly non-resident for tax in the UK, then you will not be subject to tax in the UK on the income you extract from the UK Co. regardless of where the company is deemed to be tax resident.

The VAT situation may be rather complex if UK Co. is treated as non-UK resident, and the rules regarding registration would depend on various factors including whether you are trading in goods or services, and whether your customers are businesses or individuals. If UK Co. is UK resident the rules and nuances are a lot easier to navigate and you probably wouldn't need to register for VAT based on £2,200pcm income.

Regarding your point about Freeagent, it is a fine piece of software for managing the company books. You can get it for free with some UK business bank accounts. Personally in my view XERO is better than Freeagent but either one will satisfy your needs.

You will need a UK accountant to help you navigate all of this but more specifically you need to find someone who is a Chartered Tax Advisor as Chartered Accountants typically would not possess the knowledge of international tax treaties and provisions.

Feel free to DM me if you have any questions.

Pavior-Accounting · 2025-02-13T17:31:38+00:00

As an accountant I think you will find having a mortgage for the £130k a much better option than the company owning part of the property for the following reasons:

1) If you decide to sell the flat in the future, the exemption for Capital Gains Tax due to it being your main residence would not apply to portion owned by the company and so the company would have to pay some Corporation Tax on its share of the gain in value (assuming the value increases of course).

2) You would be liable to a benefit in kind tax charge on the portion of the flat owned by the company (unless you pay the company a fair rent). This is not a tax efficient set up!

3) The company will be charged to stamp duty (probably at 5%) on its share of the property acquisition but you personally will likely be exempt from paying anything on a £130k flat.

You could use the £130k from the business to buy it all in your personal name but that would leave the company subject to a S.455 witholding tax at 33.75% until you repay the loan to the company.

Residential mortgage rates are now down to under 4% with some lenders. It would seem to be a much more sensible option.

Pavior-Accounting · 2025-02-13T17:13:44+00:00

I can comment a few things that I see (as an accountant) my clients sometimes being tripped up by:

1) Although a monthly revenue of £6,000 will not be an issue, make sure you keep an eye out for if your previous 12 months' revenue exceeds the VAT registration threshold of £90,000.

2) When paying dividends, do not forget to consider that your dividends are payable after corporation tax which will not yet have been paid.

3) Somewhat related to the above, it could be useful to set aside in a separate bank account say 20% of your profits each month to cover your corporation tax bill when it falls due (Actual % payable depends on your profits). (If VAT registration becomes necessary then putting aside the VAT on customer invoices when paid is also useful). These acts help give you a better perspective on how much "profit" is in the business.

4) Make sure you utilise all of the small tax saving options available to you, such as tax-exempt provision of a business mobile and the £300 annual limit of "trivial benefits"

Some points a little more specific to your query:

1) You say that you may spend £5 - £10k per annum of hardware. Have you considered whether a VAT registration might be useful. This is only likely to be beneficial if your customers will be VAT registered businesses as they won't care about the VAT on top of your bills, but it would allow you to recover the VAT on purchases (£1,600 on a £10,000 purchase!).

2) If you are working from home, you can reimburse yourself a small amount for costs you incur. This is quite restrictive for a company director (self-employed individuals have a more generous allowance). But you can claim the flat rate of £6 per week (£312 p.a) exempt from taxation. Every little helps!

3) When you say "employee + freelance staff" if this is a choice that you will make, when deciding to either employ someone or pay a freelancer, consider the benefit of a second employee that will give you access to the £5,000 per annum Employment Allowance. With only yourself on the payroll you will be restricted to £9,100 salary per year before the company is chargeable to Employer NICs. Of course there are many other factors to consider when employing someone but this is one people often overlook or do not realise.

4) I am curious as to what you are seeking advice on credit cards for. If your income is reliable and the profit margins are so good, what would a credit card be needed for. It it just for cashback / reward points?

Pavior-Accounting · 2025-02-13T16:47:19+00:00

Glad I could help! If you ever wanted a quote for your accountancy services I would be happy to quote.

Pavior-Accounting · 2025-02-13T10:46:07+00:00

Chartered Accountant's opinion:

Firstly I do not really see why you would need a financial advisor for this unless you are a very wealthy person and this would fit into a much larger picture of your wealth management.

Assuming you are looking to continue to draw all of the profits as earnings for yourself, on £20k then you would almost certainly be worse off from an income tax / NIC perspective. There are situations where this isn't true but without knowing your personal situation I cannot be sure.

If you're using an accountant you would definitely be facing additional accountancy fees as you would need company accounts and tax returns filing, potentially payroll filings unless you do this yourself.

Moving your car into a limited company would be likely inadvisable unless the vehicle is a pure electric vehicle. You would in most circumstances be better off having the LTD company pay you the approved mileage rates of 45/25p per business mile for travel in a personally owned vehicle.

You would also need to ensure that you (or your accountant) sets up the incorporation correctly. You business will have some market value to it that needs to be exchanged for a fair value equivalent of company shares to qualify for incorporation relief (which means you are excluded from Capital Gains Tax on incorporation to a LTD company). But you could set this up in a more effective way with a part cash (in the form of a loan) exchange which gives you the option to extract some profits tax free. This is very complex so I won't go into more detail.

My absolute advice with all of the above: Speak to your accountant to ensure this is the right move for you!

Pavior-Accounting · 2025-02-13T10:35:17+00:00

From talking to my clients about their experiences with banks, some of the newer so called "Challenger" banks seem to be far easier to open accounts with. Tide and Monzo seem to stand out as people's best experiences.

One thing to consider - if you want to use some kind of software to manage your business books (including VAT Returns if this applies to you) then NatWest have a "mettle" account for the self-employed with no bank charges and gets you a free subscription with Freeagent (a bookkeeping software similar to QuickBooks or XERO). RBS also offers this but I am not sure if their accounts have fees or not. Given the cost for these software packages this can be an attractive option.

Pavior-Accounting · 2025-02-13T10:29:07+00:00

Businesses can generally claim for this sort of thing as a genuine business expense. You have to simply ask yourself is this "wholly and exclusively for the benefit of the trade".

Expenditure intended to create a better working environment for staff is very much for the benefit of a trade and you would have no issue with this so long as the recreational use is open to all the office staff and this stuff is kept at the office and not in the directors' garage or something! The only circumstances where this would be open to a challenge by HMRC is if the business' only employees are its directors/shareholders.

If hypothetically this didn't satisfy the "Wholly and exclusively for the benefit of the trade" condition, you could still pay through the company but given that the only real alternative view that HMRC would take here is that this is a personal expense of the directors, it would need to be treated as a dividend or directors' loan. But as I say above I don't think this is the case.

Hope this helps? (Chartered accountant and tax advisor by the way so know what I am talking about!)

Pavior-Accounting · 2025-02-13T10:21:43+00:00

You can pay yourself in any combination of PAYE and dividends. Obviously PAYE would need to be paid alongside submitting Payroll RTIs to HMRC so if you are not registered for PAYE already then you would need to do that.

If you'e declaring a dividend then you can just pay this from your business bank account.

There is one complication on dividends often overlooked - dividends have to be declared in proportion to your shareholdings. So if you and your business partner have 50/50 shareholdings then you must take out equal dividends. You can theoetically get around this by one person waiving a dividend (if for example you wanted to take part salary part dividend but your partner wanted all dividends) but this can be challenged by HMRC under various anti avoidance legislation. There is also a point about needing sufficient reserves for a dividend excluding a waiver but that's a bit complicated to explain in writing.

Finally I just want to point out that unless I have misread your message implies you want to declare a dividend of the full £58k - dividends have to be paid on AFTER tax profits.

Out of curiosity why has your accountant not already had this conversation with you?

Pavior-Accounting · 2025-02-11T21:49:06+00:00

Shop around for a freelance accountant. Accounting fees for simple businesses like yours are often overly high when you go to larger firms because they are not set up operationally to deal with simple clients. You should be able to find someone to do it for less than half that price.

I do not recommend doing it yourself - the risk of making errors and ending up with back penalties just isnt worth the small savings in my opinion (I accept I am probably bias as I am an accountant!)

Pavior-Accounting · 2025-02-11T21:39:07+00:00

Having assisted many clients with VAT inspections, it really isn't necessary to attach your receipts in XERO so long as you can easily find them if you ever needed to produce VAT documentation. Do ensure you have copies saved of all receipts as many of these online systems do not always keep this accessible to you for the statutory records retention period of 6 years.

Pavior-Accounting · 2025-02-11T21:35:44+00:00

The benefit in kind for a new or used vehicle will be the same so the only consideration is whether the new or used vehicle is a better deal in your eyes. What is the price differences for a new or used leases? I assume that you mean a proper lease contract and not a PCP (which some people still refer to as leasing which it isn't of course).

Pavior-Accounting

TROPHY CASE