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Self Employed - business expenses...what do document?

7 replies

Comfysock · 26/01/2024 16:58

All new to me, just started out. No office eorking freelance from home. By ApriI I know I will have gone over £1,000 threshold for tax. So far Im wondering if I can claim.for:

I took a client for lunch it was a working lunch to discuss a project. I paid cash but have a receipt

Have a breakfast meeting booked this weekend for a potential new client. Can I claim for this if I pay?

Petrol and mileage - although car isnt registeted/insured for business use...commute to, and for social domestic pleasure

Printer ink cartridges, I need to buy for work useage

What else can I document for work, I havent a clue

OP posts:
Elleherd · 26/01/2024 18:08

As someone starting out the simple answer is treat anything that comes under entertaining, ie meals, as not tax deductible.

You need to register as a sole trader with HMRC if you haven't already.
I'd strongly advise you to have public liability insurance for whatever you're doing regardless of size. It's a false economy not to.

Based on what you've posted, I'd suggest you use the simplified expenses system: https://www.gov.uk/simpler-income-tax-simplified-expenses rather than traditional accounting.

There are less 'perks' in it, but for someone who's already started and 'hasn't a clue' fewer headaches, and it will keep you out of trouble while you find your feet.
You can get into capital allowances etc at a later date if you have a need to ie if you buy a business vehicle, expensive machinery etc.

All the basics you need to know are here: https://www.gov.uk/expenses-if-youre-self-employed

Expenses if you're self-employed

Business expenses you can claim if you're self-employed

https://www.gov.uk/expenses-if-youre-self-employed

Elleherd · 26/01/2024 18:10

Your insurance is a tax deductible cost btw.

Comfysock · 26/01/2024 23:58

@Elleherd Im working 1 day a week prob 7 hours a week. What kind of insurance would I need?

OP posts:

Interested in this thread?

Then you might like threads about this subject:

OneMoreTime23 · 27/01/2024 00:00

You must insure your car for business use as you aren’t travelling to your workplace but different places.

OneMoreTime23 · 27/01/2024 00:02

Why the second thread, by the way?

OneMoreTime23 · 27/01/2024 00:03

Depending on what your work is you may need public liability insurance or professional indemnity insurance.

Elleherd · 27/01/2024 06:36

OneMoreTime23 is correct that it might be indemnity rather than public liability, depending what you're doing.

I'm not an expert and that's what you want, but there's plenty of common sense guidelines for the level of return you're talking about.

OneMoreTime23 is also correct about insuring your car for more than social and domestic use, especially as you're providing written evidence that you are using it for business, to HMRC.
The later will probably ignore it and allow your mileage, but if a serious accident happened an investigation would show you as uninsured by omission. There are things you can wing it on, and things you shouldn't. That's one of them.

The additional insurance is a tax deductible expense.
Business bank account charges (You need to set up a business account not try and use your personal account- will be closed if discovered.)

Generally food is only tax deductible with overnight stays. It's also a potentially sticky area that gets scrutinized.

There's something called the "dual purpose" test. If you had a personal reason for incurring the expense, even if you also had a business reason for it, then the expense would be disallowed in its entirety - unless it could be accurately split between part that was for business and part for private.
So you had to get lunch because the meeting was over lunch time? The lunch is dual purpose, you both needed to eat regardless of the meeting, your business purpose falls under entertaining, so the lunch bill is disallowed.

Claiming percentages for using your home when you're one day a week using your kitchen needs to be offset against do you need permission to be using it? Do you need to pay charges for running even a small business from home? Are things like domestic rubbish collection affected? Is this small offset worth the trouble it can bring? (HMRC tax rules generally ignore other rules that don't affect them, but a grabby council can use your SA evidence to fine you for disposing of tiny amounts of commercial rubbish in your domestic bin.)
You can't offset fines or parking tickets.
You can claim a small portion of CT, but may run into problems from your council running a business from home once highlighted.
A small portion of your internet, heat, water, light, rent, mortgage, CT, can all be claimed if you want to do that maths.

If you wanted to claim your kitchen use you'd be looking at say in a 2 bedroom house: taking a 5th of your heating/lighting bill, (no of rooms) then a 7th of that, (days in use) then 1/2 to 2/3rds of that. (time actually used) If they want to get sniffy, it becomes a percentage of that percent as it's assumed you have basic heating, so it becomes a small additional amount, whereas the electric usage for additional light is clearer.

Or a much easier answer is claim the £6 pw flat rate use of home allowance which doesn't require receipts and evidence to prove.

A mobile phone wholly for business use, absolutely, (small amount of domestic calls is accepted) or it's a percentage (inc any insurance) based on how much use is business vs domestic.

Computer, memory sticks, increased ram etc, absolutely. Printer cartridges, office supply's absolutely. Costs for Zoom, computer programs and packages needed for your business, relevant associations, further training, publications, are all deductible because they are solely for business use.
That doesn't mean that things like feeding, wining and dining, or that little black dress (even if it does mean you got the contract and you don't wear it for pleasure) are allowed, because the rules got written and re-written to lower abuse of them.

Having read your other thread, the advice to get an accountant or tax advisor is sensible, they earn their money, and are a deductible business expense, as are legal advisors, solicitors etc.

If you don't, then follow the general rule of thumb around the sticky areas.
The amount of time spent wrangling over if a coffee should be treated as tax deductible or not, is generally better invested in growing your business. HTH

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