What item's are tax deductable?

cozzie · 23 June 2005 at 9:59PM

My partner has recently become self employed as a courier driver, and we were wondering how much to put aside in savings for the dreaded TAX MAN:eek: . The van and round are provided, but, for a cost. On a weekly basis he has to pay for:-

Van Rental, £200approx
Public Liability Insurance and Van Insurance, £100approx
Diesel, £125approx
(Tax £150???)

Currently he is making £750pw and if we were to put aside 20% then after all deductions he would have a take home wage of £175 _pale_ . Is tax based on the wage after all deductions or the original wage, in which case me thinks he should look for another job.

sarahlouise210 · 24 June 2005 at 12:14AM

All of the expenses you mentioned are tax deductable. In additional to this you can claim other expenses that are related to the business. Just basing it on the figures you have quoted alone I think you need to put aside about £200 per month for tax alone plus National Insurance (only know about tax I am afraid!!)

Elaine_Wilson · 24 June 2005 at 8:28AM

There are a lot of posts on this board about which items are tax deductible but for a quick guide as to what the Revenue think have a look at the notes to the self employment pages of the tax return (SA103 Notes). There is a link on this page http://www.hmrc.gov.uk/sa/forms/net-04-05.htm

As sarahlouise says the items you mention are allowable. What about a monile phone?

The tax liability is calculated on the earnings after the allowable expenses.
Plugging your figures into a 2004/05 calculator shows total tax and national insurance at £3,400 for the year, so about £65 a week. This year's is not much different.

cozzie · 24 June 2005 at 12:13PM

OOH, I forgot about the mobile, am not sure how much that will be per month yet, good thinking Elaine.

Thank you both so much, I feel so much better now, so do our pockets! I had tried to look at the Inland Rev site but couldn't find what I wanted but tbh I really wasn't sure what I was looking for anyhoo.

Thank you both again.

Justin_Credit · 26 June 2005 at 9:21PM

Any genuine expenses incurred in the running of the business can be allowable against tax, no matter how minor.

With mobile phones, to be allowable they must be a on a contract as all business calls have to be proved in the case of an investigation. Pay as you go phones are not allowable for this reason. Basically, if you can't prove it you can't claim it.

I take it that he has registered as self employed and is now paying class 2 N.I. contributions, £2.10 per week for 2005/2006.

Is he hiring the van and paying for insurance etc. from the company that he does the work for? If this is the case he needs to find out if he really is self employed. It is not up to the company that uses his services just to say that they will employ him on a self employed basis. This needs clarifying with the Revenue & Customs and it can be quite difficult to prove one way or the other especially if he does all his work for the one company.

It is also well worth getting your partner to get on one of the workshops run by the Revenue & Customs for newly self employed people, they are free. They cover all the topics that you have mentioned and all he needs to know about self assessment.

Sorry if I rambled on a bit but hope this is of some help.

JC

Debt_Free_Chick · 27 June 2005 at 7:31AM

Don't forget that the first tax bill he gets will be for all the tax due this year and a payment of 50% of this year's tax, on account for next year.

For this reason, I would put aside at least 25% of his weekly income into an account for tax. In fact, I would put aside 30%, just to be on the safe side. Ignore the allowable deductions for now ... it's not easy to do your tax accurately, as you go along. Use the 25-30% rule and you won't be far out

What item's are tax deductable?

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