For most of us work is a necessity: it pays the bills, feeds and clothes the children, and pays for that desperately needed holiday in the summer. Most of us will also be concerned about the money we have in our pocket, wallet or bank, that’s the money that sees us through from week to week , month to month.
Those of us who are on PAYE have our tax and National Insurance taken from us “at source”, so we know exactly what our budget is going to be on an ongoing basis. In our last article we showed how HMRC’s ready reckoner could help you budget by advising how much tax and NICs to set aside to meet your tax bill, now we are going to show you just how important recording your expenses and including them on your tax return is.
Failing to record your expenses correctly means you could be paying more tax than you need to – We at HMRC only want you to pay the right amount of tax at the right time, but we calculate your tax based on what you put on your self-assessment. It’s your responsibility to tell us and your responsibility to keep the evidence.
Consider the joiner who buys a packet of screws at his local hardware store which costs him £1, on his way back to his van he bins the receipt- it’s only a £1 after all! If he makes that trip twice a week for 50 weeks of the year, binning the receipt every time, he’ll fail to record over a hundred pounds worth of business expense and will end up paying tax on it.
There are plenty of common business expenses which you can easily deduct from your profit when you know how. For example:
- Do you know you can claim 45p for your first 10,000 business miles in your vehicle and 25p per business mile thereafter?
- Do you know that using your mobile for private and business use allows you to claim the business proportion as an expense?
Those professional membership costs and subscriptions, the protective clothing, the advertising costs… All legitimate business costs and all can be recorded on your SA Return.
To support you, HMRC have listened to the feedback supplied by the self-employed as to what they needed and have developed this e-learning course to help you. If you want to know what allowable business expenses are, if you need to know what a capital allowance is then access the link below and get the information direct from HMRC.
Support, knowledge and perhaps a lower tax bill may only be a click away
To access the full range of HMRC support including webinars, YouTube clips and much more, please visit https://www.gov.uk/government/collections/hmrc-webinars-email-alerts-and-videos