My Mrs started a small business last year as a sole trader. We’re not hot into the book keeping side of things (yet) so weren’t big on tracking expenses (mileage, website, training). However as she won’t have earned anything like the £11,850 Personal Allowance is it sensible just to take the approach of not claiming any expenses (and therefore not having to prepare evidence) because it’ll make no difference, or am I missing something?

For 19-20 she may get above the allowance so she’s now more strict about items that are claimable as business expenses.

Banks or even business support grants will want clear accounts to offer services and support. I would want records to show others and show growth.

For less than £11k of income is there really that much paperwork?

Just get onto QuickBooks and say ‘I’m not stopping until it’s done’. I bet you have it done in a day.

Sorry – bit more context; she’s a counsellor so it’s professional services and therefore nothing to show in terms of product / goods-in and out. I definitely see the value in proper book-keeping looking forward but for 18-19 self-assessment, should I just not bother if I can’t readily lay my hands on receipts or other evidence for expenses on the basis that she won’t breach the £11,850 personal allowance.

Do it properly, for all the time that it’ll take. It’ll keep you in good habits from the start.

We do books for my wife’s self assessment, including expenses, and she’s well below the threshold. The logic told to us was that if she’s ever over the threshold, it might look suspicious that we hadn’t been itemising them previously.

I may be wrong (I often am), but I “think” you can spread profits over a 3 year period, so taking expenses out in this year, may well help you if she returns big profits next year or the one after.

Sorry, forget that, it is only certain industries (mine being one of them!) where “averaging” can be used

As you were

should I just not bother if I can’t readily lay my hands on receipts or other evidence

If she has a diary then all the meetings are in there? Just whiz through and create invoices.

Does she not give receipts? They also would indicate things.

Room hire, phone bills etc are easy enough.

I personally would still do this – as much to evidence you are not over the threshold. Otherwise you’re cash in hand and no records…

As someone who was investigated by HMRC ( they were bemused that at the same time I was self employed, company director and employed on PAYE for two companies at once…), you NEED these records. HMRC looked into 4 years of my records – and adjusted my tax returns but a few pence each year.

Thanks all – we have invoices so good, formal records of money coming in (plus of course bank statements). Just not good records of money going out for expenses. I’ll see what I can find evidence based on reasonable efforts and ensure that from here on (and as far back April 19) that we do it ‘properly’.

@welshfarmer – I suspect you got to tick that niche SA box that asks ‘are you an interwar vicar’s wife, farmer in Wales or hold the office of Procurator Fiscal’. No such luck for me.

Just snap pics and email shit to this lot.
They do the rest.

https://1tapreceipts.com/

You don’t ever really split your expenses up on the SA form – it’s just Income – Expenses = Profit (at least for that kind of work).

Is this her only income? Because other PAYE work could be using up the tax free allowance

Be aware that the threshold for paying the Class 4 (I think) NI contributions is lower than the personal allowance.