Tax Return for a self employed, help needed...

[purplepundit]

Its such a wonderful forum that helps building confidence for the freshers in applying for HSMP. I being one of the fresher needed help on my tax returns. I am about to file taxes for my just ended financial year. I am an IT consultant and running a proprietorship firm (one man show). Now I needed to apply for HSMP and I am getting stuck at my IT returns.

What is the best way to show taxes on my income? Will the net income based tax is considered or gross income is enough for HSMP application. My accountant says if HSMP application demands your NET INCOME based returns than I need to pay a lot of tax amount since that amount I have to pay extra from my pocket because there are options where I can save tax and its not TDS as it happens in a salary income. My CA can help save my taxes by showing expenses statements but my net income will reduce in this manner.. will that be alright? can anyone suggest what shall I do in this scenerio?

Actually at present my Gross Income is coming around 13K (pounds) annually but my net income is coming 4.5k only. I can show more income but I need to pay much more tax which doesn't sound good if I can do without it. But if thats important to do I will do it.

My invoices for the companies are there with me and my payments I received reflects in my bank statements which is above 7.5k pounds. My works are also usually live as I am web consultant, I can give all those references also along with my invoices and bank statements.

I really need help on how much tax should reflect in my tax returns as its upto me how much expenses I need to show.

Appreciate your help guyes... Thank You!

[purplepundit]

can anyone help me on this regard.. it will really help me!! Thank You!

[John]

As regards HSMP applications it is the gross income that counts, before deduction of taxes or national insurance/social security and the like.

However, given that you say that you are self-employed, for the avoidance of doubt, your income is your profit .... not the gross receipts of the business. For example, and these figures are merely to illustrate the point, if the gross income of the business (your invoices) is say £50000 and your business expenses total say £21000, thus making your net profit £29000, it is the £29000 figure that counts, not the £50000 one. After all it would be the £29000 (subject to adjustments) that will then be subjected to tax.

Does that help?

[purplepundit]

Thank you John for your response! What I can understand from your response is that the NET income is considered and NOT GROSS as gross can be much higher but the total profit how much you made matters the most.

Thanks again for helping me out on this but its little trouble for me as my NET is going to be below but gross is shown good because my Accounts company already made the papers for me... let me see if I can do something now.