Self Assessment

[Maegeri]

Can anyone help me with a question about what to include as total taxable income? I am self employed and have a contract where I sometimes have to purchase items on behalf of the company I contract to. For example, I write their newsletter, get it professionally printed and then post it out to contacts. Then when I invoice them at the end of the month I include a section for my hours (taxable income) and then list the expenses they need to reimburse me for such as the printing, stamps and envelopes. They pay me for my time and also for the goods and services.

My question is do I include the expenses in my total taxable income? As they are goods that I am paid back for I don't think they class as income, they are just costs I incur on their behalf that they pay me back for. Is this the case? I don't think I should include them on my tax return at all and that I should just document them on my personal records but just want to confirm that this is correct.

Any advice gratefully received

If he invoices are to you and then the costs are part of your turnover and expenses

The invoices are from me to the company I contract to. I didn't think these items were turnover as they are things purchased on their behalf and paid back to me, so as such they aren't income?

Yes it should be your own expenses you've incurred that you include.

Since you are reimbursed for these other expenses, they haven't actually cost you anything and so are not your own expense.

However if it costs you something to buy these for your client, eg you went overdrawn and incurred interest, then the interest would be an allowable expense, I believe.

If you bill ??1000 for your time and ??200 of expenses then your turnover is ??1200

and then in your expenses side you'll have the ??200 of stuff purchased and (say) ??100 of admin

Giving a profit of ??900 which is taxable

you are not allowed to net off because of grossing up rules linked to VAT requirements

That's really helpful, thanks so much alice and Ta1kin as have been trying to work this out for ages