Self Assessment UK - Goods and services for your own use

Question

I'm a freelance web developer in the UK. I've only been freelancing for 5 months, and I am in the middle of completing my very first tax return (online).

On the form there is a box for which you may enter an amount:

Goods and services for your own use - If you, or your family or friends, take any stock or manufactured goods out of your business, or you provide any services to your family and friends, you must include the value (and not the cost to you) of what was taken out or provided, unless you have already included such value in the 'turnover' entry on the Income page.

I translate this, in my circumstances, as:

"If you provide family or friends any services, you must include the value of what was provided."

But then again I could be wrong, and that is why I post this question.

Within the year:

1. I provided SEO and update services for my dads website, free of charge. In total this only took about 4 hours.

2. I redesigned and redeveloped my own website for sole use of my business, which I continually updated, maintained, and optimised for search engines. This amounted to a lot of unaccounted hours.

The question is: are any of the above eligible to enter into 'Goods and services for your own use' ?

Answer 1

The problem with your profession is that it is hard to distinguish those activities as 'services rendered' or just a 'pastime hobby'.

If you believe that both of those activities constitutes a 'service rendered in a professional capacity', then you should include it into the 'Goods and services for your own use' field.

However, should you believe that those services rendered was not in a professional capacity and it was in a personal one (i.e. helping out), you need not include it in the field.

In addition, should you feel that the pro-bono services rendered overlaps with your professional freelance work in any way, you might want to consider the service rendered to your dad and yourself as a 'professional service' and include it in Goods and services for your own use. Such examples include (but not limited to):

• You use equipment that is used when you are doing freelancing work (e.g. laptop, commercial software)
• You use these pro-bono works as a portfolio of previous works for your potential customers.

It might be wise to call up the HMRC to clarify on your particular situation. But what I know is, this box was created to ensure that such services rendered should be considered a profit (i.e. an advantage, adds value) and not a loss (or no value).

Answer 2

Work on your own site is certainly not relevant here, that's just a part of your trade, not a service you provided to yourself. The business received the benefit of that work, not you. Suppose your business sold televisions. If you took a TV from stock for your own lounge, that would be included in this box because you have effectively paid yourself with a TV rather than cash. If you take a TV from stock to use as a demo model, that's part of your trade and not goods you have taken out of the business for your own use.

For services provided to your dad it's less clear. As Skaty said, it depends whether it's your business providing the service, or you personally. If you gave your dad a free TV then it would be clear that you have effectively paid yourself with another TV and then given it to your dad as a gift. With services it's less clear whether you're receiving services from the business for free. You might consider how it would be treated by your employer if you weren't self-employed. If you were just applying your skills to help your dad in your free time, your employer wouldn't care. If you used your employer's equipment or facilities, or hosted his site on a server that your employer pays for, your employer would be more likely to discipline you for effectively stealing services from them, as they would if you took a TV from their warehouse for him.