self assessment: query re the "expenses" bit

pajerochick

hi all,
Need a knowledgable soul here, if any left at this hour on a Monday....?!
the other half is doing his first Self Assessment, online. He started being self employed in tax year 2010-2011, only had one payer/source for this entire tax year..ie worked as a car valeter for the same company, for the whole tax year.
In that sense it isn't complex; under the £70k threshhold (obviously!) so the Short form, no capital allowances.
It's the "Expenses" bit he is wondering about. The way he is paid is weekly. Each week, the company has deducted a set figure per week for car parking, a set figure for insurance & then a percentage is taken off for "materials". After this he gets an amount/wage paid to his bank.

So the calculations we thought are:
1.)work out what the total is before all the deductions,
3.)work out what he gets in the bank,
3.)deduct the cash recieved in the bank from the Total amount.
The difference is "expenses". here is the copy of how that would appear...(slightly abbreviated HMRC form)
Income....


Total business income:£ 15903.00

Expenses



How would you like to record your expenses?*

• as a single total value

Total allowable expenses:£ 3181.00


Net profit:£ 12722.00

And then the tax is worked out on this total??
The Big Question is; It seems too simple, are we wrong ?
We are not trying to be deceitful, just unsure if the company's deductions before he receives money, do count as "expenses"..Yet since he has no option but to have them deducted at source we are thinking they fall under Expenses? if you have the time to reply to us naive peeps, it would be much appreciated..
Cheers...:o

ceeforcat

He works for one company. He is paid weekly. He is charged for car parking. Are you sure that he is 'self-employed'?

Does he, for example, invoice the company for whom he works? Does he advertise and have his own separate business account? Does he use his own tools? Who determines his hours of work? Can he choose to work for someone else during the day?

I would be more worried about his employment status because, in my opinion, he would appear to be an employee

chrismac1

I agree with the last post and have sent a link about false self-employment. His income before deductions should be the income figure in the tax return, and his deductions will form some - if not all - of the expenses you can claim. On the basis of the information in your post, his employer - like many - could be skating on thin ice by saying he is self-employed.

pjclar02

ceeforcat wrote: »

I would be more worried about his employment status because, in my opinion, he would appear to be an employee

I wouldn't be worried about this at all. Whilst I agree with Ceeforcat and Chrismac1 that there may be indicators that the relationship is one of employment, this is not the OP's other half's problem.

However, if he is self-employed he should be invoicing the company for his services. The invoice value I suspect would be minus the insurance, car parking and materials. Therefore I would just bring in the net figure as turnover (i.e. the amount that comes in to the bank).

Hope this helps

pajerochick

Really grateful for you all taking the time to reply, and so quickly this morning.
I see the issue that both ceeforcat & chrismac1 have mentioned, but will firstly deal with my initial query & it's responses - the nugget of the query being exactly what to enter on the form.

My interpretation of your replies....
chrismac1.... it is do as I have suggested in my first post in terms of declaring figures with expenses listed.
pjclar02...... he should just refer to the amount received in the bank, and not mention the expenses already deducted before that money was paid to him.
At this point I pause to think though, if he follows option 1 - Won't HMRC want to see a paper trail? Proof of what he is claiming are "expenses"?
Though he does not issue invoices, he does receive statements entitled "Sales Invoices" - it is upon these that the figures used for "expenses" (all deductions before payment is made) are listed. Should all of those be put on as an attachment to the SA?
I know ultimately by choosing to do the SA himself he is making the decision on which of those 2 options to follow.
I guess we thought it was going to be clear as to what to input. Feel a little sheepish and dim ....just wanting to do the right thing............

On to the "False Self Employment" issue....
It seems a murky field, and I do think the only winner in those cases is the company, certainly not the guys that work their socks off.
I think he still does fall under "self employed".(Chrismac1, thank you very much for the link you sent. I have read and then re read it, it is a complex area....)
If it further helps, he confirmed he is referred to as a Sub-Contractor, and could if wished send another in his stead, or choose not to work on any given day.
He pays his own NI, does not get a pension, or sick pay, or holiday pay, or any other benefits, does not have a business bank a/c & his agreement/contract has a statement in it deliberately pointing out it is not an employee/employer relationship. But it is how it is & right now the main concern is to follow the rules re tax as far as he can understand them for his situation.

hmmn.

So the dilemma is which of the two:
option 1: Include "expenses"- if so does he need to upload those "sales invoice" documents he received?
option 2: just put in the figure relating to what was received in the bank... that still seems too easy, and surely would invite further investigation?.
think we will sleep on this.. and if any further advice is offered, we'll willingly listen!
thanks again for taking the time to read the queries
nightnight for now peeps

w211

A lot of couriers and minicab drivers are in a similar situation, where they are self-employed, but are tied down to one company, having to work a set number of hours etc.

It for the companies benefit as they don't have to pay holiday or NI.

Quite often with the invoices, the company provides in on their behalf - which is easily done and uses the existing software if the jobs are allocated on such as system, and they often set the rates anyway.

They often rent a branded (with the companies logo - or sometimes they can use their own) car/van, and they can only use that vechile for carrying out the work they are given. If they don't do the set hours, they can be often be threatened with the "sack" or they will just not be given work.

pajerochick

if you're still with us, he has an added query -
He's decided he wants to upload his invoices as attachments to the online Self Assessment, but they are taking up more space than the 5MB allowed (they are Adobe8 pdfs) . Is there a way to make those files smaller & so fit them in?

thanks again for reading!