Quick accountancy question

I know we've got a few accountants on the board - could do with a bit of advice. I started doing some freelance work in April and get paid in USD through Paypal. I withdraw the full amount approximately once a week.

I'm putting aside the rough amount for tax etc. every time I withdraw, plus a little bit extra just in case, so that's in hand. I'm also planning to actually get an accountant in plenty of time to do my tax return, which I think will be due in January 2027 (please correct me if I'm wrong!). But I've had issues with keeping records in the past, and I want to make sure that I've got everything neat for when the time comes.

Is the actual amount in GBP that hits my bank account the only figure that I need to keep track of on my spreadsheet, or do I need to be more careful about recording things like conversion rates at the time it was originally paid to me? It's not a problem if so - I've got the information - but I'd rather know now and do it weekly. I've had to trawl through 18 months of files in the past because I didn't record something that my accountant needed (for a limited company), and it's not a fun time!

Thanks a lot.

 

Your accountant should be the one with the answers

 

That'll be £125.

 

Have you tried asking ChatGPT?

I think it'll be able to provide a decent overview of your requirements until you touch base with an Accountant.

 

You should get the money paid directly into a US dollar account. You can set one up for free in Revolut for instance. You can then convert the dollars into pounds at your convenience and at a perfect exchange rate. I’m guessing that your bank is charging a conversion fee and is using “bank” exchange rates.

HMRC publish monthly exchange rates for all currencies which your accountant should use to calculate your sterling income for tax purposes.

You don’t need to keep your own records for exchange rates.

 

This would be lovely, but unfortunately it's not an option - it's Paypal or nothing. And sadly if you're based in the UK Paypal won't pay out in anything but GBP, so you're hooked to their exchange rates.

 

You should be able to do your tax return anytime after the first week in April next year, January will be the last chance saloon

 

Yep, I'm aware! All the accountants I've known start looking at SA in the autumn though, providing the figures are in order. That's why I'm trying to make sure that they are.

 

I would hire the accountant now mate. They will likely charge you when they do the return I think so it makes no sense to wait

 

I've paid Accountants for over 30 years to sort my tax return out.
Go on the HMRC on line ,and have a look at doing it yourself.
I completed my first tax return this year ,and couldn't beleive how simple it was and is explained really well as you fill it in.

 

I am an accountant. You need to look up the new requirements of MTD which will compelled all businesses with turnover above £50,000 to us digital software to report information to HMRC every quarter.

 

Im semi retired ,if my turn over is around 10k would this not apply to me. ?

 

Not my specialist area, but it looks to me like you have to do the currency conversions using the official HMRC conversion tables on their website. This will probably assess your income as being higher than you actually received, as PayPal will build their own charges into the actual rate paid.

The PayPal charges and exchange rate costs are then potentially treated as allowable expenses, although I've seen reference to a £1,000 exemption that's intended to cover this.

In this scenario, I'd get an accountant sorted out now to do your returns for you (as you've indicated you are planning to do). They can advise you now on what records you need to provide to them, and the timescales that work best for them. If they can get work done outside of the 'busy season' then it's easier for them too. If there is an exemption available, as possibly indicated, then they'll have the knowledge to maximise the allowances you're entitled to use.