Sole Trader (Please Urgent Help Needed!)

[khan22]

Hi

My friend is applying for ILR in November. He is registered with HMRC as a sole trader during 2015. He is claiming half of the earning from sole trader and the other half from employment

Could someone please help and clarify:

What does net profit include for sole trade? My understanding is it is turnover-expenses?

It does not include the tax on profit or Class 2 or Class 4 NI which will be calculated and paid at the time of self-assessment.

What does the accountant letter include for the sole trader? Is there a template which he can use?

The guidance says Class 2 should be paid but from this tax year Class 2 will be collected at the time of self-assessment for sole traders.

Senior members please help and advise!!

Thanks.

Regards

[Kmaj007]

@Khan22

C'mon dude, spent few pennies and get services of an Accountant for your FRIEND offcourse

[quadusa]

I will also recommend you use an accountant. However

Revenue/Sales/Turnover
- Expenses
- Taxes
==========
Net Profit
==========

[khan22]

Thanks for the reply.

He is using an accountant.

The accountant has confirmed that for sole trader accounts net profit calculation does not include Class 2 or Class 4 NI as these are personal taxes not taxes on the business income.

I am also an accountant I agree with his accountant but when I see guidance it say Class 2 should have been paid but from this tax year the payment of Class 2 has changed and it is now collected with self-assessment.

Any senior members, Amber please help.