Newly self employed - claimable expense advice needed please

Cherez · 21 February 2007 at 11:22PM

Hi, Up until last November I was employed by a company, then made redundant, but taken back on in a self employed capacity. Nothing has changed, i still work at their offices except that i have to pay my own tax and national insurance.

Just wondering if anyone can tell me exactly what i can claim back in the way of expenses, it has been suggested that I can claim back the following, but i'm not sure if this is right?

Clothing
Lunch money
bus fares
portion of computer costs e.g. ink, percentage of replacing parts when comp goes wrong.
percentage of electric/gas etc.

Any help and advice would be greatly appreciated.

Thanks.

the_optimist · 21 February 2007 at 11:37PM

Yes, all of those, but clothing is the funny one. You can only claim on clothing, if you only wear them for work, eg safety boots (as you wouldn't wear them to go shopping). Office clothing you could wear on other occasions too, so you can't claim that. If you were asked by the IR you'd have to be able to prove that you wear those clothes for work only.

Also, you can only claim percentage of electric/ gas if you work from home

Cook_County · 21 February 2007 at 11:42PM

IF you were self-employed then "the optimist" is out of date on the clothing deduction since the rules have recently changed.

HOWEVER it sounds almost certain that you are IN FACT an employee and your employer is failing to deduct PAYE, offer you your rights under employment law etc.

Therefore it is certaiunly not your problem that your employer has failed to deduct PAYE. I would take legal advice on your position.

vinecote · 22 February 2007 at 12:58AM

if you are now self employed you can introduce certain items into your self employment which you had paid for when on paye.
if you have anything that you bought before your started self-emploiyment you can add them to you expenses under the appropriate expenses and the money or funds to buy them will be classed as capital introduced.
you dont need to prove how much they are but be reasonible .
if you drive to work your car could be included.
maybe a laptop or pc plus all the stationery and equipment you are now going to use in self employment.
if you work for someone in the same place the inland revenue may question this as you are an employee.
remember to invoice them often for work done not hours at the office.
good luck

conradmum · 22 February 2007 at 8:53AM

I agree with the other posters. If you're only working for one customer on a regular basis you'll be deemed to be employed, not self-employed. Your employer can't really do this to you under tax law. Be careful, you don't want to be held responsible for the arrangement.

Cherez · 22 February 2007 at 9:23AM

Heck, this is all very complicated, I was told a a month or so ago about the fact that i really should be classed as 'employed' but that i would have to prove that i was, if I do this, then I wont have a job

I will ring up and speak to the tax office again this afternoon.

Thank you all very much for your replies.

brasso · 22 February 2007 at 9:33AM

You need an accountant to advise you. "IR35", the scourge of IT contractors seems likely to catch you if you are planning to stay indefinitely working for one firm. If you plan to go freelance, i.e. working for other people, you've got a better chance.

the_optimist · 22 February 2007 at 11:13AM

Cook_County wrote:

IF you were self-employed then "the optimist" is out of date on the clothing deduction since the rules have recently changed.

What have I missed? I became self employed in July last year and this is what I was told. Can you tell me more?

Hoddie_2 · 22 February 2007 at 12:36PM

You cannot claim for 'everyday clothing' regardless whether you use it purely for the business or not. The tax return specifically states this. You can claim for safety clothing (such as boots, visibility clothing) and specialist clothing (chef's hat, gloves, helmet). The only exception is if you're an entertainer (actor, etc) and you need a large, varied wardrobe in order to trade.

Regards the self-employed or employed debate, the question I usually ask is this. Would the company you are working for be happy if you didn't do the work yourself? That is, would they be happy if you sent someone else from your 'company' to do the work you're contracted to do? If yes, then self-employed is fine, if no, then you're probably an employee.

You should seek a ruling from HMRC. If they rule that you're an employee, you could likely contest the fact that they terminated your employee contract in the first place.

Cook_County · 25 February 2007 at 8:17PM

Hoddie wrote:

You cannot claim for 'everyday clothing' regardless whether you use it purely for the business or not. The tax return specifically states this. You can claim for safety clothing (such as boots, visibility clothing) and specialist clothing (chef's hat, gloves, helmet). The only exception is if you're an entertainer (actor, etc) and you need a large, varied wardrobe in order to trade.

Ever since Anne Mallalieu and Ian Drummond battled this out in Court in 1982 this had been the case.

However the re-written language in s34(2) ITTOIA 2005 permits "any identifiable part or identifiable proportion". The old duality of purpose rules are no longer relevant for 2005/06 onwards in the way that us "oldies" were taught. This does not mean we can ignore case law, just that the HMRCs BIM47815 explains that apportionment of costs is now permissable so it follows that the new law permits apportionment of all costs where previously "duality" had meant disallowing the lot (as in Mallalieu).

This is more business-like but has only be circulated through the professional tax press in the last couple of months so it is unlikely that "the optimists" accountant would have known of it last Summer.

So, I'm off to claim a fraction of my umbrella now, for when I use it on business!

magic_pants · 25 February 2007 at 8:23PM

As mentioned before it sounds mighty likely you may fall under the dreaded "contractors tax"...IR35. I'd check that out for starters.

Newly self employed - claimable expense advice needed please

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