Please help a number-blind person with a tax offsetting question

(8 Posts)
cinnamongirl1976 Fri 29-Apr-16 10:57:35

I've just been offered an amazing chance to go freelance, working from home with an initial 12-month contract. It's going to give me a much better work-life balance as I currently spend 4 hours a day travelling to London.

Anyway, to be able to freelance I need to buy a computer as my existing laptop takes about 45 minutes just to turn on (no joke). I've been getting by using DH's computer at home or taking my work laptop home but really I need my own, especially as I may have to take it to client sites in future.

I've heard I can offset the cost of a computer against a tax bill, but what does this actually mean, and how do I do it? Does it mean that the cost of a laptop is deducted from a tax bill? How do I prove it's needed? Bit confused, even though I have read around the subject a lot! I am not good with figures...

Ifailed Fri 29-Apr-16 11:14:23

not done contracting myself, but all the people I know who are have their own company. The company buys the laptop, plus anything else needed to do the job. They are employees of the company, and also directors. Google is your friend here, for example here's a link aimed at people in it:
www.itcontracting.com/10-step-contracting-guide/

Badbadbunny Fri 29-Apr-16 13:01:15

No, the cost of the laptop doesn't come off your tax bill. It's deducted from your taxable income, so reduces your profit, therefore reducing the tax you pay. You get tax relief at whatever tax rate you pay on your income. If you're paying basic rate tax at 20%, and spend £300 on a laptop, you get £60 off your tax bill.

cinnamongirl1976 Fri 29-Apr-16 14:58:57

Thanks both - very helpful!

IceMaiden73 Fri 29-Apr-16 17:48:40

You need to register with HMRC

If you need a company you will need to also register this

Please get a free initial meeting with an accountant so that you know what you are doing and make sure you don't incur any penalties

MrsMargoLeadbetter Fri 29-Apr-16 19:31:00

I would consider an accountant esp as you might have PAYE and self-employment in the same year. I pay £350 for mine to produce my accounts (from expenses I keep on a spreadsheet) and do my return. For me it is peace of mind. She works from home so is more affordable than an accountant with premises.

Depending on your legal form things like travel can be deducted from your profit too.

I'd advise you save your tax as you go and try to put some money into a pension.

Good luck and enjoy your lack of commute!

LunaLoveg00d Fri 29-Apr-16 23:10:57

I'm a freelancer. You'll do a tax return at the end of the year.

basic calculation is like:

income £20,000 (as an example)
personal allowance for tax £10,000

taxable income = £10,000
LESS expenses - laptop, accounting software, etc etc etc of £1000

£9000 left to pay tax on.

cinnamongirl1976 Mon 02-May-16 23:21:20

Thanks for the helpful info - I'm already registered with HMRC but now considering an accountant!

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