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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I am self employed, I take wages (drawings) here and there

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I am self employed, I take wages (drawings) here and there sometimes weekly, sometimes every couple of weeks, . What I am confused about is, when I do my self assessment tax return, do I include all of the drawings I have taken that tax year, when declaring my business income AND business expenses- mainly the business expenses - do I include my drawings as business expenses? if not where do I declare my drawings, if at all? If I do not include my drawings, I presume I calculate income from sale - expenses only?
Sam

Hi

Thanks for your question - I am Sam and I am one of the Uk tax experts.

When you are a sole trader then no matter what you draw as income (drawings) the whole of th net income position is considered for tax and National Insurance.

So you declare the gross income and make deductions for all business expenses (except for drawings) and then what is left over is the net income position for tax and National Insurance consideration

So drawings are NOT business expenses as a self employed sole trader.

Let me know if I can assist further

Thanks

Sam

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Customer: replied 2 years ago.
That doesn't help really. I use cash accounting method for my returns, on my first return (2015/16) I provided details of all Sales (income) and all expenses on my return, the business only started 29th Feb16, so was a very small return. What I need to know is, in simple terms please :) for future returns as will be a full tax year, all the drawings I take throughout the year, do I remove them from the total of what I declare as expenses? So my return would be income - expenses (excluding the drawings) = profit declared?

Hi

Thanks for your response and sorry you could not make sense of my reply

Yes you remove them from the total that you declare as expenses (as advised above when I gave you the reason they were not allowable and then stated

"So drawings are NOT business expenses as a self employed sole trader.")

Sorry if this was not clear enough

Thanks

Sam

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