Tax return expense help please

[crackerjiller]

I'm panicking now as the deadline is so close. Struggling to find professional help.

I'm a self employed carer. I need to do my tax return for 6 months of work. Stupidly thought I could do it myself but I'm getting so confused over the allowable expenses. I've talked to other carers who contradict each other and I end up in a spin.

Please could you list allowable expenses I can use as a carer. I'm confused about the car expenses and mileage. Council tax. Time doing invoices. Someone said I could put a percentage of what my car is worth.

I am trying to find an accountant but obviously it's their busiest time.

The 45p per mile (for the first 10,000 business miles - 25p per mile thereafter) is to cover all running costs of your vehicle, so you cannot claim any costs of the car separately.

Using petrol costing £1.25 per litre and a car having an MPG of around 35, fuel cost per mile is 16p per mile. The extra 29p per mile covers your maintenance and insurance costs.

You should, however, keep a log of your business mileage, just in case HMRC were to ever ask. PPs have provided ways of doing that.

Costs you can claim are those that have been incurred "wholly" and "exclusively" for business use.

So, pay a subscription to a professional membership organisation? Work related, so tax deductible. Pay for your internet at home? Not wholly a business cost, so not tax deductible.

Buying your own uniform or work related equipment, like specialist shoes, etc? Work related, so tax deductible.

Just think to yourself "would I have paid for this if it wasn't for my work?" If the answer is no, chances are you can claim for it. If the answer is yes, then it's not entirely a work related cost.

The old TV and radio advert from HMRC said "tax doesn't have to be taxing", but it certainly is! I used to shout at that advert every time it came on!

There are many accountants who will let their clients claim dodgy expenses and unfortunately those are the types of accountants that make life difficult for the rest of us.

The person claiming 6% of their car has put the car through as a business vehicle. They should then have a private use adjustment to it, to restrict how much is claimed if it is a mixed use vehicle.

For example, you buy a £10,000 car, your tax calculation shows a reduction in profits of £600 for the 6%, but if you spend 50% of the mileage on personal use, this is then tapered back to £300. If it's a "company" car then you can claim the car tax, insurance, maintenance costs back, but again the private use adjustment would be required to those costs too. You then can't claim 45p per mile in mileage, you'd have to use the fuel only rates, which vary depending on the size of your engine and the fuel used.

The quotes you've had of £400-600 do seem reasonable to be honest. Years ago you'd have found somewhere that would do it for £150 + VAT, but the cost of living crisis has affected businesses too. Some firms would allow you to pay over the year on a monthly standing order, which might help?

Do your own this year and speak to a local firm about next year?

Payments on account only need to be made if your final tax bill for this year comes out at over £1,000. If you've only earned £8,000 in self employment, once you've calculated your "profits" you might find it's less than that anyway.

Ultimately by 31st January you would ordinarily pay your tax liability for 2023/24 and then 50% of that amount again as a payment on account towards 2024/25.

You'll then pay a second 24/25 POA in July, then any balancing liability by 31/01/2026.

Bear in mind that that 2026 payment would then also include a POA for the next year too and if you're doing a whole year of self employment, will be higher.

Well done for putting money aside each month though - many of our clients don't do that and then have a panicked scramble each year.

If you can't afford the final payment due, speak to HMRC ASAP, or use the online service - https://www.gov.uk/difficulties-paying-hmrc/pay-in-instalments to request more time to pay.

I planned to do everything on my phone but it was difficult to see/manage on such a small screen, especially invoices. I use the iPad to enrich my clients lives, they love it. So much better than a small screen.

If you are storing business paperwork and have a desk/computer/office set-up etc, and that part of your home cannot be used for anything else for that reason, then technically it is being used the whole time.

I have a mortgage so from what is being said on here it might cause issues later if I start saying I've been using my home as an office.

Most mortgages will allow working from home, as long as you're not trading from home (i.e. running a home salon). Just doing paperwork is fine.

If you use a room specifically only for business, what you can do is invalidate your claim for private residence relief for capital gains tax purposes when you later sell the property, so it's actually important to have some private use element of a room.

The link a PP posted is good for the use of home flat rates you can use - https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

Given the type of work you do, you may not reach the 25 hours a month minimum to be able to claim it though.

We have a spreadsheet that we use to calculate costs based on actual usage which works out:

• How many rooms are in the house (excluding kitchens and bathrooms)
• How many are used for business
• How many hours are worked from home per week (on average)
• How many hours is that room used for privately each week (on average)

We then add up all the costs of running the home (excluding mortgage) and do a % of the costs per room, the a % of that room by hours.

It’s been 4 years since I did my DH tax return, he’s retired, I just used to add up expenses and put total in. In expenses he claimed phone, petrol, van tax, insurance and service/mot, clothes, computer, printer, stationary, use of home for office (£200).

Thanks MN! I'd forgotten about the £1000 expenses allowance... usually my outgoings exceed this but due to a change in my work this is no longer the case and you've just save me a few hundred quid, compared to claiming individual expenses.

It’s not because of mortgages forbidding working from home - it’s because you’ll be charged capital gains tax when you sell on the portion you’ve claimed for.

Regarding mileage. There still seems confusion over when to start the day's mileage. From my home to my clients ? If I'm only visiting one person that day can I record anything? Also if I take someone shopping or for a drive do I not add the cost of those journeys to their invoice or do I just add the miles to my total for that day?

Do I need proof of the miles I do? If so how can I do that? I keep records in my diary of the miles I do and also I've kept every fuel receipt, not sure what for though.

Mileage between home and 'place of work' is not allowable. Mileage between sites of work is allowable.

So you have one client and go home, not allowable.

You have client A and then client B, only the mileage between A & B is allowable.

There was a tax case a few years ago (Samadian, iirc correctly) that made this point.

So if I only had 1 client I can't claim anything for mileage? Some weeks that is all I have. It's a 15 mile round trip.

Can I claim for the car expenses instead of mileage? I know some people who claim both but I understand this isn't allowed?

Point one - correct, you can't claim for the first trip from home and the last trip back home. Your single 15 mile trip is simply commuting, which isn't allowed for employees either, many of whom will have far longer drives to work.

Point two - as mentioned a few times, it's one or the other, if you claim 45p per mile you can claim nothing else (except for costs such as tolls and car parks). You can't swap schemes from year to year - you can only swap the scheme when you swap your car.

I've heard that once before about not swapping schemes from year to year unless you change cars. I don't really understand why this is like that. My first 6 months of business is very different from the following year and my work fluctuates alot. I haven't found the reasoning behind this rule.

For the mileage method do I need to send in to HMRC a log of all journeys?

No you don’t send them any supporting evidence or documentation unless they do a check into your return and ask for it, so hang onto it for a few years (6 technically) but you literally just put the final figures on the return and don’t send anything else.

I’m an accountant. Please just find an accountant. There are a lot of nuances and you’re already getting yourself in a tizz. You might find you just have to lump the £100 late filing penalty this time round and submit it in feb.

How do the rulings in Samadian deny claiming mileage claims from home to private clients in their own home? HMRC didn't dispute this aspect of Samadian.

I don’t think this level of detail is helping OP. She should just do it in good faith, as long as she has reasoning and rationale/evidence behind what she puts down she won’t get into trouble and is mega unlikely to be checked anyway.

@DogInATent

The upper tribunal in the final paragraph of the judgement confirmed home to place of business travel not allowable

I'm hoping to scramble my way through and complete it myself then when accountants are available in February onwards I'm hoping to go through them for the following year. I think I read I could amend my tax return for up to a year after completing is this correct? Once I've got professional advice then I could correct what I've entered.

As you said working for only 6 months if it is after April last year you don't have to do tax return until after April this year and do not need to make a payment until Jan 2026

I filed 22/23 yesterday ( a year late) and 23/24 today, early. Each one cost £609 p,us vat which is an allowable expense and grossed me three times that in tax savings. Please use an accountant for your own peace of mind

I'm trying to do a tax return for 6 months of work starting in October 2023. I thought it wouldn't be this difficult, it's the conflicting advice that confuses me. People tell me their accountant has said this and another person's accountant had said you can't do that etc. It seems a very ambiguous process.

Your approach is good, get it in by the deadline then you can amend after. But hopefully things have been cleared up here for you eg. With the car stuff to just use the mileage.

in my opinion you’re fine counting mileage from your home to your first client because your base is your home.

it’s only if you went to an office base then out from there to see clients, you couldn’t count from home to your office base.

honestly put that down and if you ever did get checked and had done something technically incorrect but in good faith, you would not get in trouble, trust me HMRC have bigger fish to fry!

This blurry screenshot isn't very readable, but you are assuming that OP's clients are 'places of business' akin to a hospital or an office. I would say that the relevant sentence is actually this one:

Travel expenses are treated as deductible in relation to itinerant work (such as Dr Samadian’s home visits to patients).

If OP is visiting multiple private clients in a day, their homes are not going to be 'places of business'.

HMRC didn't dispute that Dr Samadian's travel from home for home visits to patients was tax deductable - the case was mainly about travel to and between various hospitals where he worked.