Tax Expenses

mar7t1n

A simple question I hope. Is it worth buying something on your self employment business accounts and claiming it as outgoing even if you don't have to buy it?

Ie. I host some websites for people. Which I currently host on a corner of my free website from my ISP. Hence no cost, no change to profits. But it means I have to faff about and can't host so many personal holiday pictures.

If I spend £100 a year on commercial web hosting, which I can claim as a business expenses in my tax return, am I simply not paying £40 in tax, thus I'm still £60 worse off? Or do I get that better web hosting for free?

redpete

mar7t1n wrote: »

A simple question I hope. Is it worth buying something on your self employment business accounts and claiming it as outgoing even if you don't have to buy it?

Ie. I host some websites for people. Which I currently host on a corner of my free website from my ISP. Hence no cost, no change to profits. But it means I have to faff about and can't host so many personal holiday pictures.

If I spend £100 a year on commercial web hosting, which I can claim as a business expenses in my tax return, am I simply not paying £40 in tax, thus I'm still £60 worse off? Or do I get that better web hosting for free?

The taxman (or other tax payers) does not pay all your business expenses for you. Tax relief on expenses means you don't pay tax on the income that is offset by that expense, so in your example you would be worse off by paying for the web-space but not by the whole £100.

coldstar

If your £100 commercial web hosting gives you nothing more than you get with your free hosting then there is no point is spending £100 on it.

You have to judge if the commercial web hosting gives you somthing that will increase your profits by at least £100 before it becomes worth considering.

mar7t1n

Thanks I see now, otherewise you could spend an infinite amount buying things "for the business". But I think something which costs £100 in real terms will only be a £60 loss I think for a 40% tax payer. Or £80 for a 20% tax payer. But it's still worth shopping around for the best deal.