Tax Return for Self Employed Electrician

veddycent

Hi all,

This is my first post here so if this is in the wrong category I apologise.

I am about to fill in my tax return for 2010/11 and I need some advice.

I am a self employed electrician and I'm currently contracted to work for a company. I drive my own van to work and use my own tools.

I need to know the full list of items I can claim as expenses. This is the list I have so far. Please feel free to correct me if any of them are a wrong.

- Mileage
- Van maintenance
- Van Insurance (I read this somewhere but I'm not too sure if its true)
- Road Tax
- MOT Costs
- Tools
- Tool maintenance
- Specialist clothing i.e. helmet, gloves, boots etc
- Mobile phone (pay as you go and is roughly £5 month) (99.9% of calls on this phone are work related)
- Pension

Any advice and reply's will be much appreciated.

Thanks

BoGoF

For your first lot, depends if you are claiming 40p/25p per mile....or actual costs/capital allowances

Pension is not a business expense

John_Pierpoint

You are obviously brand new to the wacky world of self employment?

You are just about to create your annual on-line tax return?

So let us start at the beginning:

Please explain what it is that makes you think you are self employed and not the employee of your customer or some company set up to hire out your services:

A

B

C

etc.

Should you be part of the CIS scheme?

Where is your place of business?

Now assuming that you have the badges of being a self employed businessman:

You are already paying that extra weekly tax called class 2 National Insurance?

So you are getting the on-line system to calculate your liability for income Tax and Class 4 national insurance?

You business incurs expenses that can be set against profits immediately (eg you have to stay away from home working on one of your jobs, you have to buy a roll of earth wire sleeving, even if you then invoice your customer for it separately from the labour charge. ie it has to go through your books).

Some of your costs are capital expenditure: This is paying for expensive things that you need to earn your profits, that are likely to last more than a year. Your van is the only likely candidate, unless you are stocking up with some expensive test gear. Capital expenditure is "depreciated" annually according to a formula supplied by the tax man. However at the moment, in an attempt to encourage small business men like yourself, the government is allowing a high level of "free depreciation". This means that quite expensive bits of kit can be 100% charged against your profits in the year that you buy them.

Your van is probably used privately as well as part of your business,
do you ever collect the weekly shop from the supermarket for example?
So if the van has a modest value and size and is used both privately and for business, you are likely to find that NOT having it as part of your business but charging the business 40p a mile (45p since April 6th this year) could be a more profitable way of charging, it is certainly a lot less trouble than accounting for every item of expenditure and possibly having to depreciate the capital cost.
(you cannot have it both ways, it is 40p a mile OR do all the accounting)

For the other expenses, the basic test is "could I perform my business, without spending this money", if the answer in no, then put the expenditure in the relevant box on the on-line form.

The pension payments will have their own entry, they are not part of your business profit calculation but a tax allowable part of your personal expenditure.

What are the dates of your accounting year? You can play games to delay tax payments but for convenience your first year is likely to run from when you started the contract with your customer until 5th April, the last day of HMRC's accounting year.

There are lots of similar threads to yours on here, and you will find accountants who can advise on ways to charge for the less obvious expenses - such as paying your partner to do this paperwork chore for you, while you get on earning profits for your business.

A business can be anything from earning a few quid each week on Ebay to selling your services as a brain surgeon, so the amount of support you need has to be cost effective compared to your level of profits.

http://www.hmrc.gov.uk/incometax/relief-self-emp.htm

If your business is a success you might be worrying about VAT by this time next year.;)

http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm

ceeforcat

Could not agree more - 'I'm currently contracted to work for a company' - says it all really.

chrismac1

Im not sure what the last post meant. Everyone is contracted to work for someone, I am contracted to work for 109 clients at the moment. If the post was meant to suggest to the OP to consider his or her employment status, I agree. If the OP is working within the CIS scheme for his current employer (note that in this sector this word is banded around freely even for a one week job, with no specific legal definition of the word being meant or implied) then a responsible CIS contractor will already - as part of his or her statutory duties - have evaluated employment status. So we can assume, for example, that the OP will be stood down in short order if the work runs dry and all the other not very good Ts and Cs which are common to the sector.

Earlier posts have correctly pointed out that taking a good decision over how to claim motoring costs will be important. You can only change this when you change the vehicle.

Other costs not yet mentioned but which I'd expect to see some or all of - or at least ask the client if he or she had forgotten them! - in this sector are:

Business insurance
Costs of maintaining NEC domestic installer or other licence to operate
stationery
bank charges if a business bank account is being operated
accountancy fees if one is hired
advertising and marketing
cost of use of own home - stick in £3 per week if in any doubts!

veddycent

Thanks to all who replied.

To clarify some points. Currently I am working at a site in S!!!!horpe by a company that has contracted me work with them due to the volume of work. Once this work is complete I would have to find work elsewhere.

A bit of background. I worked for company about 10 years then all of a sudden for no reason the boss decided to pack up the business. I was of work for a short while but managed to get another job with a colleague from the previous company. This was going well for about 8 months until I got made redundant (due to lack of work available). So after that I became self employed. This was early 2010.

Also I purchased the van shortly after the first company packed in, so at the time I was NOT self employed. The van is only used for work.

So just to confirm I can claim for:
Mileage (I know the rates etc)
Van maintenance

But what about the rest??

- Van Insurance (I read this somewhere but I'm not too sure if its true)
- Road Tax
- MOT Costs
- Tools
- Tool maintenance
- Specialist clothing i.e. helmet, gloves, boots etc
- Mobile phone (pay as you go and is roughly £5 month) (99.9% of calls on this phone are work related)
- Pension

Any help would be much appreciated.

Thanks

CLAPTON

you can claim mileage or actual costs but not both

so if you claim mileage then you can't claim road tax, insurance, mot, fuel, repairs, new tyres etc they are all included in the 45ppm

veddycent

Thanks CLAPTON that makes more sense.

If I claim for road tax, insurance, mot, fuel, repairs, new tyres etc will this go under Capital Allowances?

John_Pierpoint

http://tips.hrbs.biz/running-your-business/tax-deductible-expenses/

http://www.pistonheads.com/gassing/topic.asp?h=0&f=92&t=882076&mid=0&i=20&nmt=Newly+Self+Employed+-+Buying+a+Van&mid=0

How many customers have you had in the last 18 months?

Have you quoted them a price for what you are doing at the moment?

If you broke your leg tomorrow, what would happen to the job?

[I think you are doing exactly the right thing - standing on your own two feet and getting on with your life plus offering to pay your taxes - but I don't make the rules - the nanny state does, even in an Indian owned steel town.:D].

chrismac1

If in doubt, claim 40 pence! (Or you can get in a real mess.) The pension is not a business expense, neither is National Insurance. But you can claim the other things in this thread above.

ceeforcat

chrismac1 Yesterday, 2:12 PM
Im not sure what the last post meant. Everyone is contracted to work for someone, I am contracted to work for 109 clients at the moment. If the post was meant to suggest to the OP to consider his or her employment status, I agree.

That's exactly what I was suggesting chrismac - you are contracted to work for 109- the op, it appears to me, is contracted to work for just one.