mileage tax allowance

janemum

Hi I wonder if anyone can help me with a tax question

I'm not sure if I have posted this in the right place, I am new to this site

I am a Self Employed Domestic Cleaner

I have 5 different customers houses I clean every week ( different house each day)

I do this every week, ( its just a little round I built up )

my question is about mileage allowance, I use my own car.

A. can I claim .45p per mile travelling to the house I clean

B. can I claim .45p per mile travelling to the house I clean and then also the RETURN journey back to my home.

C. not allowed any claim as I'm traveling to work ?


I am registered as a sole trader at my home address so I guess that is my office, and place of work.


many thanks in advance for anyone that can help me

BTW i have read the HRMC stuff and Im still confused
I want to do my own tax return as I dont really earn enough to pay an accountant

thanks Jane

catwoman73

Hi Jane

Yes you can claim 45 pence per mile return trip for each job, as a reduction off your earnings. If you supply cleaning products, cloths etc you can claim for them as well, as well as the mileage for any special trips to go buy them. I would set up a simple spreadsheet to work all this out automatically. Doing your tax return online is quite easy and if the five cleaning jobs are your only work, you probably won't earn enough to pay tax anyway as the personal allowance is just over £8000 per year, unless the jobs are significantly more than a couple of hours in someone's house type.

janemum

Thanks soo much for this catwoman , x
yes your right my earnings do fall below the tax threshold but I wanted the tax man to know what I'm doing thats why I registered self employed as I am a worrier,

one more thing if I may......... it isn't a lot that I earn and I get paid in cash so I often find I either spend the cash on the way home buying some shopping or putting more petrol in the car or dinner money for the children so I don't end up paying the cash in the bank, ( for my records ) its usaully gone before I have enough to take a trip to the bank to pay it in , I did try to at first ,
I suppose this may be a big problem ? it has been worring me

many thanks
Jane

HappyBunny

You are better off paying the cash into the bank - so that there is proof for the taxman if he should ever ask to see details of your earnings. If not, you need to keep a record of who pays you what and when, and also what you pay out in cash such as "wages" for yourself, cleaning supplies, uniform, advertising etc. Make sure you keep all your receipts. There may also be other allowances you can claim such as laundry.

Savvy_Sue

If paying it into the bank is not convenient, get yourself a notebook and write down every payment you're given, get the customer to sign. On the other page, write down everything you spend on the business.

jimmo

I know some people do worry about tax matters but you really don’t need to get carried away with this especially if you are not going to become liable to tax.

In theory the self-employed should have a separate (business)bank account into which they should deposit every penny of takings and out of which they pay every penny of business expenses. Also any drawings (paying yourself) should be transferred from the business bank account to the personal bank account.

Nice theory but probably prohibitively expensive and time consuming in such an apparently small business as yours but, if you really worry, that is what you need to do.

In a cash business the next step down is to maintain separate cash systems, a business wallet or purse and a private wallet or purse but in practise, I would suggest this rarely, if ever, works and taxmen are trained to identify weaknesses in such systems.

Whilst Savvy_Sue’s suggestion of keeping a book and getting your clients to sign every time they pay you money may seem to have merit it is, quite frankly, something that the taxman will ignore. If it ever got that far, the taxman’s attitude would be that your business accounts are a sham and it is mathematically obvious that your figures don’t add up. Whether it is your takings, outgoings or cashflow won’t really matter. If the figures don’t balance something is wrong.

Having said all that the important thing to the taxman is whether any tax is at risk.

If you have no other taxable income and your gross annual takings are less than £8,105 there is no way that you will be liable to tax.

You may, or may not be liable to Class 2 National Insurance Contributions and whilst that is something you have not asked about, it could be far more important than tax

John_Pierpoint

Class 2 National Insurance Contributions are "just another tax" (to quote the tax help line).
How ever this tax comes with some rights to claim benefits. Signing up for Class 2 National Insurance Contributions acts as a trigger to identify the self employed. If your profits are low you can apply for exemption BUT you may endanger your right to benefits, specifically your right to a full state pension.

http://www.hmrc.gov.uk/working/intro/class2.htm

http://en.wikipedia.org/wiki/National_Insurance

00ec25

John_Pierpoint wrote: »

If your profits are low you can apply for exemption BUT you may endanger your right to benefits, specifically your right to a full state pension.

given your user name janemum are you receiving child benefit?

if so then do not rush into making NI contibutions before you check your status as anyone getting child benefit is automatically credited with an NI contribtion even if they pay no tax

of course if they are no longer rug rats and CB has long finished then do consider whetehr you would be wise to pay NI even voluntarily so as to get a pension credit etc