PAYE + Sole Trader

[50andOut]

Hi All

I have had a look around the posts and can't see a clear answer for my question, hope someone can help clarify.

I am a PAYE earner with a Salary of Circa €80k+. I have also recently set up as a sole trader for a services based business, where I run classes. So I need to pay tax on the additional income I make, but as an incremental income. Most of the info I can find on revenue is for either PAYE or a business, not much info on the combined set up, even though I assume its common enough.

I see under revenue "myaccount" I can add additional income, it seems up to €5k, above this needs to be entered into "Ros" however I cannot find clear details as to what is included in this €5k. There is nowhere to add details on the income, expense details so I assume its a net figure - my net for this year is zero.

My question is how do I know/confirm what to declare as income (i.e. after expenses if I cannot find out which expenses are deductible)? Am I correct that I have 0 additional income?



Not sure if that makes sense - but for example - ytd:
Expenses.
Training course - €990
Flights Accom - €400
Insurance €600
Equipment €500
Advertising €300
Hall Hire €800

Earnings
€1500

In reality I have no net income to add, but it wont let me do that and I don't feel comfortable not adding anything as it appears then as if I just ignored the requirement to declare.

Next year I will be ramping up a little and the figures would be more like - Exp €3k, Income €9k, so i'll need to register for Ros it seem - however I was hoping to buy a car and avail of capital allowances to reduce that figure. So that's another question on the feasibility of that?

thanks for any guidance
50&O

 

[Protocol]

If your gross non-PAYE income is more than €30,000 and your net non-PAYE income is more than €5,000 a year, you should submit a Form 11 instead. Most people submitting a Form 11 must do so through the Revenue Online Service (ROS).

 

[50andOut]

Hi Protocol

Thanks and yes, had seen that statement previously. Since I am well under the net non paye threshold of 5k for this year I am sticking with the additional income option on "My Account", I may need to look at form 11 for next year tho.

My questions are:
This year

1. Is it right that I am only plugging in the final net income figure into additional income, without any reference to inc+exp
2. How do I know what expenses are allowable?

In the example above, (actual exp but rough figures) there's about 3600 exp and 1500 income - assuming all items are able to be included as as expense. If this is correct then I don't need to submit anything in this year for additional income right?

Next year

1. Can I carry forward the additional loss, not offset (3600-1500=2100) for the next year
2. Purchasing a vehicle for use by the business, can reduce the taxable amount via capital allowances?

• I have found two different ways of approaching - revenue site info says max €24k allowable on a straight line basis 12.5% p.a - 2nd option from a tax website, says cars Not exceeding 130 g/km CO2 emissions Write Down allowance 18% p.a. - no cap mentioned.

sorry for the multiple themes in this, trying to get my head around what to do right now for submission, but also needing a car asap to support the travel required and trying to figure out of I can afford it.

thanks
50&O

 

[T McGibney]

2nd option from a tax website, says cars Not exceeding 130 g/km CO2 emissions Write Down allowance 18% p.a. - no cap mentioned.

That's a UK allowance.

 

[50andOut]

That's a UK allowance.

Oh Really - that's weird, it was an Irish accounting site .ie domain, Quote "advice on maximising tax relief for capital expenditure for your business in the Ireland area. "

Ok well thanks, that's one item cleared up. So the 24k over 8 years stands and therefore equates to 3k exp p.a. So if I buy a car for sole use of the business, next year will bring my non-PAYE income down from est €6k to €3k

Any input on the 4 question points?

Appreciate any info

tnx

 

[cremeegg]

Is it right that I am only plugging in the final net income figure into additional income, without any reference to inc+exp

As far as I understand the question, the answer is yes. You are not required to submit accounts, just the taxable profit. This is because you are below the limit.

How do I know what expenses are allowable?

Expenses which are incurred "wholly necessarily and exclusively" for the businesses is the phrase as far as I remember. Basically entertaining is not allowed, pretty much every other cost of the business is.

Perhaps I am missing something, this should be fairly straightforward.

In the example above, (actual exp but rough figures) there's about 3600 exp and 1500 income - assuming all items are able to be included as as expense. If this is correct then I don't need to submit anything in this year for additional income right?

Right

Can I carry forward the additional loss, not offset (3600-1500=2100) for the next year

Yes

Purchasing a vehicle for use by the business, can reduce the taxable amount via capital allowances?

Yes. Strictly speaking the taxable profit is not reduced but can be offset by a capital allowance.

So if I buy a car for sole use of the business, next year will bring my non-PAYE income down from est €6k to €3k

Although Revenue does believe in Santa Claus, (xmas parties are generally tax deductible), it does not believe in the Tooth Fairy or sole traders with cars "for the sole use of the business"

 

[50andOut]

Thanks CremeEgg, that's mostly stacking up with my understanding and assumptions thus far.

On the last part re car use, not sure how this would work. We are a 1 car family atm and have never wanted or needed a 2nd car till now. I am 5 mins from train and commute daily for main job. Wife does all the driving midweek - with 3 kids its a 7 seater and we share driving for whatever weekend trips. But I now need a second car purely to ferry myself and my training equipment around where current car is already in use.. (Its a big cost to lay out to effectively store some equipment and do 3 runs a week, I loathe spending money on a car tbh, but its a necessity and am only considering spending €30k iso €10k since it will save €€ on a tax and be reliable...) but anyway..

From what I have read, if I were to use it for journeys that are not to do with business use say 20% of the time, then I will just apportion the 80% business use for tax reclaim. i.e. €2400 p.a. iso €3k? So I assume I just log journeys somewhere and show business mileage as my evidence of distance travelled, vs car mileage and then if not 100% business use i'll have a quick reference to calculate and evidence for the submission.

(I haven't checked insurance yet, but assuming since its not social domestic and leisure category I don't even know if my wife could drive it if she wanted to)

cheers
50andO

 

[Taxpert]

Cremegg is right about revenue and the tooth fairy. No way will the revenue accept that a car is used 100% for business.

If you can demonstrate that the mileage is 80% for business you should be ok. Best to keep a record of journeys in case they ask. After that take 80% of all motor expenses and deduct from income.

You can't deduct depreciation. In lieu of this you can deduct capital allowance worth ( depending on co2 emissions of car) up to 12.5% of purchase cost of car ( X 80%).