[Finance] Tax query - Self Employed & PAYE at the same time

[Stoichkov]

Evening NSC,

I am going to pay for some tax advice but I thought I'd use the NSC knowledge-bank to hopefully refine my enquiry...

I'm employed at my main job and pay tax via PAYE

I also have a small business for which our accountants do the accounts and do my personal tax return. They ask for my 'main job' P60 and then the business details for the relevant year. They put both together and then tell me how much extra tax I owe.

My question is - if we have some big capital business expenditure that will likely mean we return a loss, say, next year - does my PAYE tax effectively cover some of that?

Is my PAYE tax a 'free hit' in terms of business expense? By way of an example - if I paid 15k PAYE I could 'lose' 15k on the small business on those capital expenses and recover the PAYE?

15 years having that small business - I should know this by now but, alas, its a complete mystery. All of it.

One of the reasons I ask this is because - in year 1 - after we'd laid out the capital to set the business up, I got a tax refund

Anyway, cheers and UTA

 

[Gazwag]

Assuming your capital exp can all be claimed, ie it's not a car for example, this will come off your business profits. If this makes a loss this will be deducted from your total other income ie your salary. Your tax is then calculated on your total income less losses and after deduction of your personal allowance and then the tax your have paid under paye is taken off to leave your tax liability due which, if you have a business loss, will result in a refund due. You will have no class 4 nic to pay as you made a loss

In simple terms, if you are a basic rate tax payer, if you made a £1000 business loss you would get £200 refunded - £1,000@20%