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Kristian Charles Williams

Kristian Charles Williams

May 10, 2023

Expenses, Tax Reliefs & Refunds for Self-Assessment

TAXO'D the taxman and totally know your Allowable Expenses, Tax Reliefs & Refunds for Self-Assessment

Tax Returned? No way!

Expenses, Tax Reliefs & Refunds for Self-Assessment

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.

'Let me tell you how it will be. There's one for you, nineteen for me' (George Harrison, The Quiet One)

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.

What is Tax Deductible and how do self employed expenses work?

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)

Are you actually self employed ?

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.

  • Do you risk your own money?
  • Do you provide the main items of equipment you need to do your job?
  • Do you agree to do a job for a fixed price, regardless of how long the job may take?
  • Do you regularly work for a number of different people?
  • Do you have to correct unsatisfactory work in your own time and at your own expense?
  • Can you hire someone to work?
  • Can you decide what work to do, how and when to do the work and where to provide the services?

If you answered YES to the above questions - then you are indeed Self-Employed, let's move on!

1. Expenses if you are home-based

You can claim :-

  • Electric
  • Heating
  • Cleaning
  • Internet
  • Phone
  • Insurance
  • Mortgage interest / Rent
  • Council tax
  • Water rates

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.

2. Expenses if office-based

You can claim :-

  • Heating
  • Lighting
  • Cleaning
  • Water rates
  • Rent
  • Business rates
  • General maintenance

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.

TAXO'D blog - Expenses

3. Accomodation & travel costs

You can claim :-

  • vehicle insurance
  • repairs and servicing
  • fuel
  • parking
  • hire charges
  • vehicle licence fees
  • breakdown cover
  • train, bus, air and taxi fares
  • hotel rooms
  • meals on overnight business trips

You cannot claim for:

  • non-business driving or travel costs
  • fines
  • travel between home and work

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.

4. Clothing expenses

You can claim :-

  • uniforms
  • protective clothing needed for your work
  • costumes for actors or entertainers

You cannot claim for everyday clothing even if you wear it for work.

5. Salary and benefit expenses

You can claim :-

  • employee and staff salaries
  • bonuses
  • pensions
  • benefits
  • agency fees
  • subcontractors
  • employer’s National Insurance
  • training courses related to your business

You cannot claim for carers or domestic help, for example nannies.

6. Legal and financial costs

You can claim :-

  • hiring of accountants, solicitors, surveyors and architects for business reasons
  • professional indemnity insurance premiums

You cannot claim for legal costs of buying property and machinery or fines for breaking the law

7. Bank and credit card expenses

You can claim :-

  • bank, overdraft and credit card charges
  • interest on bank and business loans
  • hire purchase interest
  • leasing payments
  • alternative finance payments

8. Marketing and subscriptions costs

You can claim :-

  • advertising in newspapers or directories
  • bulk mail advertising (mailshots)
  • free samples
  • website costs
  • trade or professional journals
  • trade body or professional organisation membership if related to your business

You cannot claim for entertaining clients, suppliers and customers, event hospitality, payments to political parties, gym membership fees or donations to charity.

9. Training course expenses

You can claim

  • training that helps you improve the skills and knowledge you use in your business (The training courses must be related to your business.

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 ..

Why not let TAXO'D tax return app for freelancers handle all of your tax woes?

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.

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TAXO'D blog Author

Kristian Charles Williams

Head of Growth, Partnerships & Mugician

A freelance human and one that resides in creative industries. For the best part I have been an independent musician and a (not-so-independent) composer.

TAXO'D.  Beautiful, simple, award-winning, end-to-end accounting solution for freelancers. Record as you go. Know what you owe. Tax return, done. TAXO'D.  Beautiful, simple, award-winning, end-to-end accounting solution for freelancers. Record as you go. Know what you owe. Tax return, done. TAXO'D.  Beautiful, simple, award-winning, end-to-end accounting solution for freelancers. Record as you go. Know what you owe. Tax return, done.
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