Self Assessment - When to record bank fees? Thread poster: Gaia Talamini
| Gaia Talamini United Kingdom Local time: 07:18 English to Italian + ...
I'm really sorry for the stupid question, but I'm having a complete blank and I can't for the life of me remember what I did last year: Let's say I invoice a client in March 2013 (previous tax year). The client doesn't pay me until May 2013 (current tax year). Since I'm using accruals accounting, I record the money received in the previous year tax return. The same goes for the bank fee I incurred when receiving the money, right? Thank you! | | | Di Penney United Kingdom Local time: 07:18 French to English In the period in which the charge is incurred | Jul 11, 2013 |
An expense should be recorded in the period in which it was incurred. In your example, therefore, the bank charge for processing the invoice payment should be posted in May 2013. In theory (and sometimes, alas, in practice), you might never receive payment for that invoice, so no bank charge would ever be incurred. | | | Peter Linton (X) Local time: 07:18 Swedish to English + ... Cash accounting | Jul 11, 2013 |
I am no tax expert, so I just charge bank charges to my business expenses, which keeps it simple. You are the 1st person I have come across who uses accruals accounting. Absolutely correct, according to the HMRC website. But I have also heard talks given by HMRC officials saying that all you need for self-assessment is a cashbook to record your transactions as they are incurred and then enter the details online. So I do it that way. In the long run these things even out | | | Di Penney United Kingdom Local time: 07:18 French to English Just checked with my accountant... | Jul 11, 2013 |
"The charge is levied on the receipt of the funds therefore will be accountable at that time." | |
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Gaia Talamini United Kingdom Local time: 07:18 English to Italian + ... TOPIC STARTER
Thank you everyone - it makes perfect sense to me, what threw me off is that yes, the charge is incurred in the following tax year, but the same goes for the payment, and I do record that one in the previous tax year. It's a bit confusing. I'll be switching to cash accounting for the current tax year, it will save me a headache But when I started in 2011 the HMRC was recommending accruals, so I went with it. I'm glad ... See more Thank you everyone - it makes perfect sense to me, what threw me off is that yes, the charge is incurred in the following tax year, but the same goes for the payment, and I do record that one in the previous tax year. It's a bit confusing. I'll be switching to cash accounting for the current tax year, it will save me a headache But when I started in 2011 the HMRC was recommending accruals, so I went with it. I'm glad they changed their minds! ▲ Collapse | | | There is no moderator assigned specifically to this forum. To report site rules violations or get help, please contact site staff » Self Assessment - When to record bank fees? Protemos translation business management system | Create your account in minutes, and start working! 3-month trial for agencies, and free for freelancers!
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