Hmrc - accounts of **********k

Accounting
1

I pay my annual self assessment to HMRC from my business account. How should I tag this in QF?

Cheers

Gary

2

Drawings if you’re self employed, Director’s Loan if you’re a limited company.

Your self assessment is a personal liability, not a business expense, so you’re effectively taking money out of the business for personal use, which is the definition of drawings.

3

Thanks Ian,

I understand. That makes sense even to me :slight_smile:

Cheers

Gary

4

For a sole trader? How is that the case, the only reason you’re having to do the SA is because of the business, so it’s a business expense. No

5

The profit that each of your sole trader businesses makes counts as income for you as an individual, and goes into the Self Assessment calculation along with all your other sources of income (employment/pension, savings interest, etc.) to determine how much income tax and national insurance you owe.

The tax is calculated from the business profits (turnover minus expenses) but it is not itself an expense of any one business - if you were to deduct it as an expense then it would reduce the profit of that business, which would in turn reduce the final profit figure for that business, which would reduce the amount of tax you had to pay, which would reduce the amount you were deducting, which would increase the profit, which would increase the tax…

6

If you have one business and that business and that business only is the reason you need to seek professional help on completing the legally required tax documents. I don’t see why it is any different to paying an account to prepare your accounts.

7

Indeed, and the accountant’s fee would then be a valid business expense (reducing the profit on which you have to pay tax). But the tax itself is still a personal liability.

8

Aha, I see why we are at cross purposes.

I interpreted the OP saying how do I pay for the self assement to HMRC

As in the prep, you are seeing, (I think correctly on a re-read) as I owe HMRC ÂŁxxx in tax, what do I put that as!

So yes, tax money to HMRC is “drawings/wages” unfortunate as that may be !:grinning_face:

9

OK, I’ll tag my hmrc payments to drawings/wages. Thanks Gary