It's awesome being a freelancer, namely because you are free. You have no boss (other than yourself.) You can work whenever you want, where ever you want and wearing whatever you want. You are a master of your own time meaning you can manage your time better and schedule more time with people you love and care about.
Alas, every rose has its thorn and (more often than not) said rose has many branches with many pesky thorns. When working for yourself you quickly learn that taking care of your own finances and taxes is a time consuming, confusing affair. Staying on top of your business expenses (not to mention raising invoices and chasing payments) is not for the faint hearted.
Is there any good news? Yes! Absolutely. The good news is that many of these expenses can be claimed back as tax deductions.
TAXO'D has put together this quick list of tax-deductible expenses not to be forgotten while working as a freelancer:
In 2020 and 2021, most of us have been working from home due to COVID19 restrictions and the good news is you can claim a percentage of the costs of your household bills. To make this even easier and to reduce your accounting time further, you can opt for 'simplified expenses' with HMRC - a simplified way for people working at home to save money.
Unless you are Gordan Gekko, most of us edominantly use are mobile phones for personal things. However, if you can keep track of what phone activity you have used for business purposes then you can claim this back as a percentage of your bills.
You cannot claim any travel expenses to and from your place of work (and that includes travelling from your bed to your desk for the entire year of 2020!) If you need to use public transport (e.g planes, trains and buses) for work-related reasons (ie meeting clients, collecting items required for work) then you can claim this travel back.
Just make sure to keep all your receipts. If you use your private vehicle for work, you can use the simplified method once again to calculate your expenses based on your mileage rather than attempting to keep track of all the individual running and repair costs associated with keeping the vehicle.
'I think therefore I am' - indeed, but you would do a lot more thinking if you fill your time with the eternal quest for knowledge.
Any courses or qualifications that relate to your field of work are 100% tax-deductible. This also includes all your freelancer textbooks and training resources and materials.
What other reason do you need to constantly be learning and evolving? The more you educate yourself - the less your income tax exposure is going to be. Once again just keep your receipts OK René Descartes ;-)
Ah! Here we go ... that 40-tier-birthday-cake! Yes. that ski-trip to Whistler! Yes. That new tennis racket! Yes. Those new converse Allstars! They are miscellaneous expenses aint they guvnor? Mmmmm.
Not so much those things (unless you are indeed a professional cake builder, an elite skier, tennis star or grunge musician) But if you are spending out on things like stationery, printer ink, computer hard drives etc, make sure you keep track of all your freelancer expenses. I promise you, come the end of the year you will be surprised how much these things all add up.
All too much for you? All this red tape and additional bureaucracy tarnishing your freelancer dreams? Worry not....
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.
Award-winning freelance Designer, Director & Animator and tax vigalante
