With 2020 behind us and having safely landed in 2021 with a belly (only slightly full) of mince pies .. because you couldn't go and visit your nan ..
and a head only slightly aching (because you couldn't go anywhere for new year).
Then you are in a prime state of mind (and body) to start prepping your 2019/2020 tax return for your self-assessment as the deadline is the 31st of January 2021. Yeah! As always it's gonna absolutely suck but of the few positives you can draw from this cyclic experience .. make sure you are not giving the taxman more than they are entitled to by knowing exactly what expenses, tax relief and tax refunds you are entitled to.
We've been there with you, we were (and still are) freelancers ourselves and have learnt the hard way by never really understanding what we are entitled to claim. Now, because you have been a total smarty-pants and have been using the incredible TAXO'D tax app to file your tax return, (which knows what you 'should' know and does all the boring stuff for you) all you have to do now is push the button and your tax return is sent to HMRC.
If however, you have not been a smarty-pants .. it's not too late .
Like Sloth to the Goonies, TAXO'D (the incredible tax-filing, direct to HMRC app) is here to help and GOONIES NEVER SAY DIE ! So pull on your superman t-shirt and red braces, gather some Baby Ruth chocolate bars and listen carefully as I tell you all about business expenses you can deduct from your tax bill.
As freelancers, if we make a profit in the tax year then we have to pay some tax based on how much profit we have made. However, there are a numerous expenses you can claim which will lower the tax you have to pay HMRC.
These expenses (if necessary for your business) can be deducted from your profit.
Broadly speaking, if you buy something to serve your business - you can deduct its full cost when working out your taxable profits. (Unless it is classed as a Capital Asset - these 'longer term, fixed assets are taxed differently)
It sounds silly right . HMRC classifies people under a 'contract of service' as Employed people and those who work under a 'contract for services' as self-employed. Remember you can be both. And with IR35 still populating the headlines - you need to be absolutely sure which one (or both) you are.
If you answered YES to the above questions - then you are indeed Self-Employed, let's move on!
You can claim :-
You simply can't sign these total amounts of as tax deductible. What you submit should be based on the floor area or number of rooms used for business, and the %age of time the space is used for working.
Example You have 4 rooms in your home, one of which you use only as an office. Your electricity bill for the year is £400. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100 as allowable expenses (£400 divided by 4). If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100 divided by 7).
If you work for 25 hours or more a month from home and you simply can't be dealing with all the faff involved with trying to calculate how much time you spend in how much floor space of your own home then just use this : HMRC's simplified expenses system.
You can claim :-
You cannot claim initial cost of buildings, alterations and improvements (such as extensions) - although such work may qualify for annual investment allowance or capital allowances.
You can claim :-
You cannot claim for:
Again, if you can't be dealing with the 'jumping through the hoops' ... you can use a flat rate (see above for simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
You can claim :-
You cannot claim for everyday clothing even if you wear it for work.
You can claim :-
You cannot claim for carers or domestic help, for example nannies.
You can claim :-
You cannot claim for legal costs of buying property and machinery or fines for breaking the law
You can claim :-
You can claim :-
You cannot claim for entertaining clients, suppliers and customers, event hospitality, payments to political parties, gym membership fees or donations to charity.
You can claim
You cannot claim for training courses that help you start a new business or expand into new areas of business, including anything related to your current business.
To conclude ..
We provide an end-to-end tax solution for all freelancers and most self-employed tax payers. Record as you go, know what you owe and file direct to HMRC. No Green Form. No More Accountants. All from your phone or desktop.
TAXO'D is a salary tax calculator. You record as you go (on your phone or your computer) day by day, throughout the tax year. As the weeks unfold and you are actively recording your income and expenses. With TAXO'D personal tax app - you will see in real-time displays the tax and National Insurance that you owe.With TAXO'D tax return software know exactly what tax you owe and when you owe it. Simple.
TAXO'D mobile tax tool does away with the need for an accountant, saving you further money and time. If you are earning money independently and responsible for your own taxes then sign up today. And find out why TAXO'D is the best self assessment software for freelancers and contractors.
Tax Sucks! Spend less time and money on it with TAXO'D tax filing app
Disclaimer: This is simply a guide and should not be treated as tax advice. Contact HMRC directly if you need tax advice.