Self assessment- anyone care to share thoughts on what I might be missing?(21 Posts)
Yet another year when I should have got an accountant. But anyway- I am sure that each year I over pay because I am not savvy to the various expenses I could claim for.
Is anyone willing to share? I work freelance and so far have come up with these on the basis of non-itemised accounts:
Phone- have 1 exclusively for work.
Broadband- roughly 60%.
Utilities- going for £3 a day because I assume if I itemise this I'd have to itemise everything else which would be a real pain.
Bits for computer
Stationery inc. printer ink and paper
Fares for meetings etc by train.
Professional fees and insurances
Website - domain renewal and work on my website
Anything else that I could claim for re. house that I have missed?
"Anything else that I could claim for re. house that I have missed?"
Yes. A proportion of all of the following:
rent or mortgage interest, Council Tax, water rates, buildings and contents insurance, repairs and maintenance, estate management/service charge, ground rent, just about anything else except new building/extension work including outbuildings.
HMRC's interpretation of the "rules" applying to this are set out here, but it takes background knowledge and experience to interpret them correctly. You have until 5th April to resubmit your returns as far back as 2008/9 which should be enough time to find an accountant to help.
On what basis are you claiming £3 a day utilities? What do you mean by "non-itemised accounts" - you are obliged to keep adequate business records.
What I mean by non itemised is that I can either put in detailed accounts for all the above, or a figure that covers all of them. I think you know what I mean. This doesn't mean that I don't have evidence. What it does mean is that I have not the time- nor do any accountants- to do this for me in detail on my return.
The £3 a day covers heating and lighting used while working at home- they do not need a break down of figures as you will know, for this amount.
Well, I would have misunderstood "non-itemised accounts" too. You've asked for some assistance/answers and are suddenly sounding all defensive. It's a bit weird.
Are you renting? Or do you own the property you work in?
I may not have accountant speak but I am not doing anything untoward or underhand I assure you. On the self assessment form you can either put a single figure or a breakdown of each expense. I thought that was clear to anyone who knows about this.
HMRC allows you to claim £3 a week , That's clear. I don't need to break it down into figures.
I am not defensive I just get a bit fed up with accountants making out it's all rocket science, given I have no time now to find an acct, rather than just telling me simply what I need to know. It's too late to line their pockets but if they reply it could be helpful- otherwise I'll just google and find out another way.
I understand how to work out the use of broadband, and phones, and other stuff so i am asking if the same applies to the other things mentioned here- council tax, water rates etc etc- dividing the figure by the rooms in your house , and a percentage of that .
Yes, you work it out exactly the same as broadband etc.
What I do is take a total for all of those household expenses that I also use in the business and take a percentage of the whole. So rent, gas, electric, broadband, phone, insurance...I'm sure I'm missing some. I'll be at my work computer later this afternoon and I'll look if you want. I don't pay council tax, BTW, it's part of my rent.
My accountant, who just reviews my books, he's a friend, has never said it's a bad way to do it.
"What I mean by non itemised is that I can either put in detailed accounts for all the above, or a figure that covers all of them. I think you know what I mean."
No I didn't actually, I thought you meant that you did not have records of individual items; thanks for clarifying that.
"The £3 a day covers heating and lighting used while working at home- they do not need a break down of figures as you will know, for this amount."
The £3 a week unsubstantiated allowance is only for employees who are required to work from home, it does not apply to the self-employed. In fact HMRC's guidance allows them to accept "a reasonable estimate consistent with the underlying facts" - which may well be more than £3, although as this is an estimate you would need to provide details under "other information" (i.e. "Expenses include an estimate of £x per week totalling £y for the use of part of my home for [describe it e.g. writing up business records and dealing with business emails]"). However if you do substantial amounts of work at home I think it is likely that someone with the appropriate knowledge and experience could come up with a substantially higher claim, whilst ensuring that you do not lose any Private Residence Relief which could otherwise result in you incurring a Capital Gains Tax charge on a disposal of your home at any time in the future. This is not rocket science, but HMRC's internal guidance alone runs to dozens of pages, and as their examples seem to be chosen to result in a much lower claim than is usually achieved in practice, whilst also in some cases creating a potential liability to Capital Gains Tax it would be irresponsible of me to provide a link to that guidance without some caveat as to its use.
I recognise that there is insufficient time to obtain professional advice whilst meeting the filing deadline for 2011/12 in a little over two weeks, which is why I explained that you could revisit the return later, and as you implied that you may have overpaid tax in the past I thought it would be helpful to provide the timescales for correction of previous year's returns.
£3 per week is not a typo, it is the correct figure that employers may pay to their employees as an unsubstantiated allowance if they require them to work from home. This figure has generously been raised to £4 per week from April 2012.
Thanks. I will do the best I can now then revisit with someone who knows more about it .
Is there a part on the form for noting what you say? I thought ( have't got to that bit yet this year) that there was just a single box for expenses- are you saying there is a box I need to find which asks for "other information rearding expenditure"- is that clearly visible on the site under expenses and outgoings?
When you get to the end of the online form there is a box for "other information", and I believe you can also attach a file if you can't fit it all in the box.
I'm a bit confused now as I thought there was no need to itemise expenses like this unless you earned over £73K?
I thought they accepted the total figure as long as you had avidence of those expenses.
No there is no need to provide a breakdown or analysis of expenses (itemise really does mean something different to most people) unless your turnover is over £73,000.
However you are only supposed to include actual expenditure in your expenses; if any of your expenses are estimated you must provide further information. There is a second reason for providing additional information: HMRC must act on information provided within 12 months, so if they do not follow up on the information you provide your estimate will stand (except in certain circumstances such as fraud). But if you do not provide them with any information that is necessary they can make a "discovery assessment" at some time in the future.
You might find it helpful to read the notes that go with the paper version of the self employment return. This includes the following:
"We expect you to provide final figures of your income and expenses. If you include any estimated or provisional figures, please identify them in box 19 Any other information on page TR 6 of your tax return and say why they are estimated or provisional and how you arrived at the figures."
I'm really confused. Where did the OP say she was estimating?
Op is estimating broadband and utilities
The £3 per week (or originally per day) utilities is an estimate.
Strictly speaking the 60% broadband is an apportionment rather than an estimate and does not have to be declared, but I would always recommend declaring it due to the 12 month rule mentioned earlier.
What's all this about "estimate"?
I didn't use the word as far as I know, Estimate to me means working out a figure- not a guess.
I'm getting a headache. And my taxes are fine so I'm going to bow out.
It doesn't really matter what it means to you, it's what it means to HMRC and what the implications are that count.
HMRC use the word "estimate" in this context to mean an amount that is not related to an exact amount of expenditure. So if I claim half my electricity bill of £234.56, i.e. £117.28 that is not an estimate, but if I say "I know a pay about £200 a month electricity so I'm going to claim £100" that is an estimate.
I don't think that there is anything more I can say that is going to help you - I hope everything goes smoothly for you with this return.
Ignore estimate- I mean calculate- to me as a non HMRC person they mean the same thing. In my head an estimation=calculation. If that caused confusion then sorry. I am doing the latter in your example- precise amounts.
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