Do self-employed people HAVE to claim all expenses?

smurfitlee

Would be grateful for help here - I am self-employed and do all my work over the internet, so my expenses are tiny. I've never claimed them in the past as it didn't seem worth the hassle to just get £30 or whatever off my tax bill.

This year though I've had a few more expenses, only a few hundred pounds though. Do I need to claim these or can I just not claim again?

From the tax man's point of view I can't see any reason why they would insist you claim expenses, as of course they get more tax from you if you don't claim. However, I am considering trying to get a mortgage this year (yes, stop laughing at the back there, you never know) and I presume it would have to be self-cert. And if it is self-cert then will my income look higher because I have not claimed expenses? Is that ever so slightly dodgy in any way?

Thanks for any input!

thebaldwindowfitter

no you dont have to claim any expenses if you dont wont to

fengirl_2

I disagree - you should include all your outgoings in your accounts, otherwise they are not a true reflection of the state of your business. Should you be subject to an investigation by HMRC, as soon as they find you are not including all your expenditure, that will be an 'in' for them to find that you are not declaring all your income.

tyllwyd

Why are you saying that it is hassle? I'm like you, most of my work is on screen so my expenses are tiny - a bit of stationery, a few stamps etc. But it isn't difficult to claim it - I just keep the receipts in an envelope, and put in the total as my expenses.

I'm not so confident about claiming cost of electricity etc because the rules seem so vague about what you can and can't claim when you work from home, so I don't include that. I do stick in a bit for my broadband though.

BTW apart from the extra expenses you mention, you might find that the everyday expenses of your business are more than you think, even if they are only a couple of quid here and there, over a year they can add up.

smurfitlee

It's not a massive hassle, just that I like to keep things simple, and I basically thought that being paid £30 for keeping track of all expenses over an entire year wasn't worth it.

Seems to be disagreement so far as to whether you need to claim or not...any other opinions? I do see the point of Fengirl when she says that it will not accurately reflect your business if you don't claim...I record all my income religiously, every last penny is accounted for, so I'm not too worried about an investigation, but I would like to know what the HMRC rules on this are...

tyllwyd

My guess is not that you will get into trouble for not claiming expenses as such, but that if your expenses are zero that might mean that they flag up your business as one that they should investigate because there is something unusual about it.

BTW This link is quite useful
http://www.bytestart.co.uk/content/taxlegal/9_7/claiming-mortgage-interest.shtml

fengirl_2

My comments were from an ex Inspector of Taxes viewpoint - the fact that you record and account for income is irrelevent - any weakness in your record keeping or accounts is an opening for HMRC.

tyllwyd

fengirl wrote: »

My comments were from an ex Inspector of Taxes viewpoint - the fact that you record and account for income is irrelevent - any weakness in your record keeping or accounts is an opening for HMRC.

That's the thing I hate about doing my tax - if I claim for something that I shouldn't, then I'll be in trouble with the tax man, but if I don't claim for something that I should, then I might end up in trouble anyway. Doesn't exactly seem fair!

Horace

Taxes are not fair unfortunately.

I have kept all my receipts even down to bus tickets that I have to buy when I attend meetings (sometimes it is just easier and cheaper than using the car especially if I am going somewhere where parking is limited).

I keep a note of everthing including the mileage on my car (lucky I have two trip meters) so that I know how many miles I have driven for the business. I keep a small notebook for mileage and another for mobile phone top ups.

Lentilsforteaagain

I include all our incomings and outgoings religiously but do worry alot about it (like regularly waking up and 3 am with a knot in my stomach about it) because we don't have a separate business account so we have so many things to take into account - receipts, expenses, personal funds used (ie. leant to the business), drawings minus the personal funds used (to pay it back to us) ... it's a bit tangled but as everything is religiously accounted for (plus the fact I'm certainly not trying to hide anything) everything should be ok.

Certainly doesn't stop me worrying about "what ifs" though - what if the way I work it all out is wrong? (It shouldn't be, I did a basic book-keeping course) What if we do get investigated and the tax man (or lady!) tears me to shreds about my book-keeping methods and the fact that we don't have a separate account?

It's all so scary!!

sodamnfunky

I claim for everything I can, however things like my mobile bill where the DD comes from my partners account, I dont bother with, as it is too much hassle, and I would have to allow a fair bit for personal use.
My accounts are pretty basic, as I mostly get paid by cheque, and it goes into the only account I have. Expenses receipts are always kept, and its pretty much just total up my total turnover, take away all expenses for my business which are always 100% business use, and hey presto.

I do however have a slight worry, should I be investigated, and they see I havent worked for 2 months because there was no work.
However thats the nature of being self employed I guess. Doesnt stop mini panics around this time of year...