Tax Allowances for Self Employed

Hi I know there's a few tax accountants on this forum - but to start off with, check with the Inland Revenue website and if possible, attend one of their workshops and grill them with all your questions! Hope that's helpful, Regards, Caroline Caroline Lashley The Editor's Office, London theeditorsoffice@yahoo.co.uk Tel/fax: 0845 125 9493
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Caroline Lashley
The Editor's Office, London

Email: theeditorsoffice@yahoo.co.uk

We're currently taking bookings during August for 1-2-1 seminar-based consultations in central London – only £45 during August 2007 only, so if you want to get the basics of using public relations in readiness for 2008, BOOK NOW!

I think it means that you can claim business expenses against your tax allowances for the business. Expenses like rent, equipment etc are valid expenses of the business so you dont have to pay tax on them as they arnt business profit or your earnings. Im sure an accountant will be along shortly to tell me if thats wrong. -- Simon Meech http://www.hardwiredesign.com
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Simon Meech
http://www.startups.co.uk/forums/topic.asp?TOPIC_ID=2990 - Startups Web Design offer!
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And as if by magic the accountant appeared. This is one of those simple questions that is very hard to answer. The simple answer is anything that is used "wholly and exclusively" for the purpose of your trade. ie anything you use in your business. Unfortunately there is a huge stack of case law sitting behind this to interpret the rule. As a first up you might like to check the tax section of this website which has some notes on deducting expenses: http://www.startups.co.uk/tax/ The best thing to do is keep a record of all your expenditure including your receipts, whether in a handwritten note book, neatly in excel or stashed in an old shoe box. You can then get some help at the end of the year deciding what you can and can’t reclaim from the tax man. I know I’m terribly biased, but if you get some professional help the fee should be somewhat less than the money they save you by getting things sorted out correctly, and claiming everything you can against tax. Hope this is of help, Regards, James Smith Chartered Accountant www.uktaxshop.co.uk 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

okay, i kinda get it. But what percentage of the business 'expenses' can get deducted from tax? For example, if i put down £200 a month for rental of property, what amount of that can i expect to get back? Hopefully thats an easy question thanks for all your help guys...
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Well 100% of a "business" expense can be offset Ie if you earn £1000, have £200 in allowable expenses; you will pay tax on £800. In answer to your question, it depends what you use the property for. If you are running a business from an office that costs you £200 a month, the whole of that cost would be deductible from tax. If you are living in half of the property, and using half as an office, probably half would be deductible. In terms of how much you "get back" this will be equivalent to the tax rate, which is approx 30% for the self employed. Ie a £100 business expense only costs you around £70 out of your post tax earnings. I hope this helps you. James Smith Chartered Accountant www.uktaxshop.co.uk 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

ahh, its clicked... i see now. HAHA - i was thinkin about it on the totally wrong angle. Thanks
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James Smith Chartered Accountant www.uktaxshop.co.uk 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

Okay, another quick questions... probably a simple answer mind... :o) IF I am running my new business from home, and my rent for example was £600 a month... what percentage of the rent can i claim from the Inland revenue. Half as you mention? Or simply, as much as I can get away with? How would you measure it is what I wanna know. Oh also, if I already have some of the necessary equipment, but are still paying for it on hire purchase, can i claim anything on that? Thanks
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The rules on claiming home expenses are actually being reviewed atm, and are quite involved. The basic theory is to take your total expenses, such as rent, heat, light, council tax bills and divide by the number of rooms in your home. I.e. if you have 5 rooms, and use one as an office 1/5th would be (broadly speaking) allowable. There are some other issues here, one of which is if you use a room exclusively for business use, there is a risk this would be assessed for business rates, on top of your council tax. In practice application is dependant on your local council. Simple solution is to put a “non work” item in the room, to show the room is used after hours. Regarding using personal items in the business, if it is a lease, you would be able to claim the proportion of the cost (split between personal and work use) if it is an asset you own (ie a loan agreement) there are things called “capital allowances” that can be claimed. This is a large topic in itself. As you can see seemingly simple questions tend to have the habit of getting rather complex, and I haven’t really scratched the surface here. The good news is your accountant should do the thinking for you, and will just tell you “yes” or “no” when it comes to putting your expenses through. Regards, James Smith Chartered Accountant www.uktaxshop.co.uk 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

Dont forget though that if you are claiming rent in the property that you are living in you will be liable for Business Rates from the Council. This can be waved if you have lets say a beddroom that you use as an office. (stick a bed in it). It is not the easy way to get money back from the IR for your business premises if you are running a business from home as you may also incurr a tax to pay should you move from your home. Is this not right James!

You can also claim for marketing expenses. I would recommend you get an accountant - shouldn't be too expensive for a small business. Nick Disappointed by the performance of your website? Apply for your FREE Website Health Check and find out why. http://members.aol.com/all4yourpc/health.htm
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Hi all, I have set up my own business as a bookkeeper and keep reading that 'new to business' people should have an accountant, however sometimes a bookkeeper whilst keeping your 'books' straight on a weeklymonthly basis can also answer some of the questions like those you have asked mOrpheen, and in the long run may be cheaper. My accountant charged me £60.00 for setting up my limited company and a further £80.00 was paid to Companies House. In hindsight I could have completed the paperwork myself. I am not saying that you should not speak to an accountant, but that sometimes the simple questions will be ones a bookkeeper comes up against constantly and would probably know the answer to. I am just saying give the idea of a bookkeeper a chance. The cost incurred is one of those tax deductable items you enquired about. Great site this isn't it.

ritac, Your accountant oevercharged you. The fee to comapnies House is only £20.00 per comapny,unless of course he or she sent four applications on your behalf. Larry@naasei.net Free domain names at www.naasei.net Telephone: 0870 199 4226
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Larry@naasei.net
Free domain names at www.naasei.net
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Hello, I have startup a consultancy business and in operating this I have to send the weekdays (sunday night to Friday night) away from home in rented accomodation and in a different country, can I offset all the rental and travling expenses against my self employed profit? Can I also offset an overnight allowance for each night spent away for food etc?

What are the rules regarding items that are used for business purpoese only but could be used for personal use? eg. A suit which is only worn for work, paper & ink for a printer, other computer equipment, business lunches, mobile phone bill etc. How can I prove that they are solely for business use?