So I currently work full time, normal PAYE stuff but have 2 working dogs which I work on shoots a couple of times a week during the season. The tax rules are changing in Apr 13 and I will now need to provide NI details to my employer (the shoot) and they will have to pay tax directly on my earnings…

However, it actually costs me to work the dogs (fuel to get there and around the shoot in my own vehicle, dog food, vets bills etc etc) as I only get £45/day – and that’s generous, many places are nearer £30/day. Pretty much everyone else who does it is in the same situation. No one does it for the money, but we are all decidedly hacked of that HMRC are taxing us when we’re not actually making any money!!

So the question is, can I set up a limited company, put all my legitimate dog expenses through it, along with my £45/day and get a tax rebate. We’re not talking huge amounts, prob about £500 in tax in total over the year. Can this tax issue be taken in isolation within the ltd company or do I need to factor in my PAYE stuff as well? I’m not looking to do anything clever (or underhand!) and write off any tax liabilities from my main job against this ltd company, all I would do is show a limited company that broke even, made no profit and claim the tax back on the earnings within the ltd company.

Expect the usual STW flaming over anything tax related 😆

It doesn’t necessarily have to be a ltd company, you can claim those expenses if you are self employed.

You need to work out whether the cost of setting up and managing (i.e paying an accountant)the limited company will justify the gains. Probably not with the numbers you’re talking about.

presumably up til now neither you or the client have been paying tax on the income. And as of next year they are going to to start declaring who is working for them and have to start paying the HMRC their share (why has it taken this long?)

Going self employed or LTD will mean the income is still being taxed, its just you rather than the client that is writing the cheque. You could claim back a bit of petrol and a some dog food on a pro-rata basis, perhaps. But I suspect the turnover would be so low the HMRC would need convincing that this was a business rather than a hobby.

Given that you and all the other casuals are in the same boat the result is either non of you will bother turning up anymore if the tax taken doesn’t make it worth your while – so the client will have to stump up a more attractive fee…… or you’ll still keep turning up, because its fun (and you’d keep turning up even if you were doing it for free)

have to start paying the HMRC their share (why has it taken this long?)

Paying the HMRC their share? Share of what??

Very rough sums:
Outgoings related specifically to working the dogs c.£1250pa (conservative!)
Income from working the dogs c.£900
Amount I make and therefore should pay tax on -£350.

Yes, yes, I’m clearly screwing the taxman… Probably the reason why the economy is so screwed, eh?!

As I said, no one does it for the money, we all enjoy training / working our dogs. But it costs us money to do so. No one is looking to avoid paying tax on income or any sort of elaborate tax avoidance but it doesn’t feel right to pay tax on a loss…

For what you are describing forming a limited Co would just be a big ball ache for the amount you are talking about. You would have to complete annual accounts, Companies House annual returns, corporation tax returns etc so it would mostly involve giving a big chunk of the money you made to accountants (I would work on £800-1000 at least if you provided the accountants with decent paperwork).

Just operate on a self employed basis – keep a set of books and open a bank account specific to it. Pay for your expenses like dog food costs, vet bills etc through this account and pay the £45 per day in to it. Keep a set of books relating to this work – money in/money out. At the end of the year work out what you made after deducting related expenses and enter this on your tax return.

I might be missing something that an accountant can point out but it should be simple. Just be honest with your numbers.

Very rough sums:
Outgoings related specifically to working the dogs c.£1250pa (conservative!)
Income from working the dogs c.£900
Amount I make and therefore should pay tax on -£350.

its a hobby then. Not saying that in a disparaging sense – but the HMRC are not going to view an activity where you take hardly any income but then spend much more, every year, as a business for the purpose of self assessment, or as a LTD co.

Set up an offshore company and pay no tax- well it works if your a billionaire 👿

No one is looking to avoid paying tax on income or any sort of elaborate tax avoidance but it doesn’t feel right to pay tax on a loss…

Am I missing something, or are you simply not charging enough then?

If you are looking at it purely from a business perspective, you’re clearly stating you’re income is not enough to cover costs. Purely in in those terms then you should stop doing it, keep the dogs as pets and take up golf. If on the other hand you are saying you work the dogs for the love of it, would do it any way and that getting some cash provides some kind of subsidy to your overall costs which you would cover anyway out of your own pocket then you are still getting that, but at a much reduced rate.

Take money out the system, run the dogs for feed/fuel/vet tab.
Large estate should have an account with a local country store, could they not give a ‘materials’ allowance for you to draw on?