In the last edition of Equine Touchin’ UK there were five top tips for marketing your ET skills. So you have started to offer ET to clients what does that mean ….it means in HM Revenue and Customs (“HMRC”) eyes that you have started to trade; you need to notify HMRC of this fact and any profits and losses from the trade need to be included in your tax return.
However it’s not all bad news, the good news is that you can deduct expenses from your income and if you have a loss in the early years you can set this loss against other income and you may get a tax refund.
There are three ways to offer ET as a business, in your own name, in partnership with someone else or through a company. When you start out, offering ET through your own name is the simplest and easiest option.
Then what…you need to record your sales and your expenses. You can keep a record of sales and expenses in a notebook or on a spreadsheet and if you really enjoy accounting (yes some people do!) you can buy or download free accounting software.
Sales are straight forward; just make a note of the date, the client’s name and the amount charged. At the end of the year add the list up and this is your income.
Expenses are trickier but worth keeping track of as these reduce the profit and your tax. The main expenses you will incur are:
- Transport costs. Keep a record of your mileage incurred on travelling to ET clients and you will be able to claim either a share of your car’s total cost for the year or 45p per mile. 45p per mile is the easiest calculation.
- Do you have an ET web site, business cards or leaflets as part of your marketing? This cost will be an expense of the business.
- Do you use paper and notebooks to keep records on each horse? These costs will be an expense of the business.
- Do you keep files and records at home? You may be able to claim part of your home costs as a business expense.
- Do you attend the annual conference? There are training seminars at the annual conference so this would be continuing professional education and the expenses of attending and travel to and from the conference will be costs of the business.
Remember to keep all your receipts.