self employed question regarding petrol and electric

lauram25

hi all !

im about to go self employed (fingers crossed) and have a few questions.

im going to be doing domestic help such as ironing and cleaning and some basic paperwork filing for a friends business.

i already have a car but know that i can claim back a percentage of my petrol and insurance and electric for the ironing at home i do.

my question is how on earth do i work out the percentage?

id be doing around 16-18 hours per week but obviously i also use my car for personal use.

please give me the dummies guide as i really am clueless.

motorguy

lauram25 wrote: »

hi all !

im about to go self employed (fingers crossed) and have a few questions.

im going to be doing domestic help such as ironing and cleaning and some basic paperwork filing for a friends business.

i already have a car but know that i can claim back a percentage of my petrol and insurance and electric for the ironing at home i do.

my question is how on earth do i work out the percentage?

id be doing around 16-18 hours per week but obviously i also use my car for personal use.

please give me the dummies guide as i really am clueless.

You would be safer getting yourself an accountant. Budget around £300-£350 a year for one.

They will save you a lot more than that in what you can claim for.

Mistral001

You can have an allowance against tax of 45p per mile if you are not doing over 10,000 a year. No need to work out petrol used etc.

That would be your biggest expence I would imagine. If you can keep receipts for stationery and try to work out how much electricity you use for the iron, that might be worth claiming an allowance on, but I suspect it would pence per day and might not be worth it.

HappyMJ

Well....my iron uses 1400W per hour and at 15p/kWh costs 21p/hour so I suppose you could claim 21 pence for every hour you iron for.

lauram25

Mistral001 wrote: »

You can have an allowance against tax of 45p per mile if you are not doing over 10,000 a year. No need to work out petrol used etc.

That would be your biggest expence I would imagine. If you can keep receipts for stationery and try to work out how much electricity you use for the iron, that might be worth claiming an allowance on, but I suspect it would pence per day and might not be worth it.

i dont think il be earning enough for tax in my first tax year so should i just leave that out then?

i dont really want to get an accountant as they are expensive and il only be doing around 16 hours at min wage so its a lot to pay out.

HappyMJ

lauram25 wrote: »

i dont think il be earning enough for tax in my first tax year so should i just leave that out then?

i dont really want to get an accountant as they are expensive and il only be doing around 16 hours at min wage so its a lot to pay out.

Are you on tax credits? The lower you get your profit...even if way below the personal allowance then the more you get in tax credits. A tax accountant for basic affairs and what is already well presented accounts can cost as little as £100 a year...once a year. That's if you do most of the work and keep good accounts.

lauram25

HappyMJ wrote: »

Are you on tax credits? The lower you get your profit...even if way below the personal allowance then the more you get in tax credits. A tax accountant for basic affairs and what is already well presented accounts can cost as little as £100 a year...once a year. That's if you do most of the work and keep good accounts.

i will be on tax credits yes. at the minute im on JSA as a single parent and wanting to come off of that and start up on my own. thats why at the minute im only doing the min required to get WTC and then hopefully build it up once i get established.

its just hard knowing how much to claim back as i use my car for more personal use then work use but obviously things like ironing i would go and pick it up and then drop it off as well so would be paying out petrol on it. i was also told i may be able to claim back a percentage of my road tax and insurance, but again i have no idea how to calculate this.

HappyMJ

lauram25 wrote: »

i will be on tax credits yes. at the minute im on JSA as a single parent and wanting to come off of that and start up on my own. thats why at the minute im only doing the min required to get WTC and then hopefully build it up once i get established.

its just hard knowing how much to claim back as i use my car for more personal use then work use but obviously things like ironing i would go and pick it up and then drop it off as well so would be paying out petrol on it. i was also told i may be able to claim back a percentage of my road tax and insurance, but again i have no idea how to calculate this.

If HMRC ever wish to investigate you for under declaring income for tax credits then it it advantageous to have a tax accountant on your side. Anything earnt in excess of about £76 a week will be removed from your tax credits and council and housing benefit claims pound for pound so many people are tempted to under declare profit to maximize tax credits.

It's not worth calculating it on a cheap car that you own....it may be worth calculating if you are better off on a car that is leased. Just keep a diary of how many miles you do for business and claim 45p a mile.

lauram25

HappyMJ wrote: »

If HMRC ever wish to investigate you for under declaring income for tax credits then it it advantageous to have a tax accountant on your side. Anything earnt in excess of about £76 a week will be removed from your tax credits and council and housing benefit claims pound for pound so many people are tempted to under declare profit to maximize tax credits.

It's not worth calculating it on a cheap car that you own....it may be worth calculating if you are better off on a car that is leased. Just keep a diary of how many miles you do for business and claim 45p a mile.

i would be declaring around £110 per week so that is over the £76 anyway, and yeah ive looked into how much would be taken off my tax credits and HB etc already so i know where i stand.

ok so i wont bother with insurance and road tax then, and just keep an eye on my mileage when it is for business use. and keep all petrol receipts im assuming even though im obviously not claiming back the full amount on the receipt?

thanks

HappyMJ

lauram25 wrote: »

i would be declaring around £110 per week so that is over the £76 anyway, and yeah ive looked into how much would be taken off my tax credits and HB etc already so i know where i stand.

ok so i wont bother with insurance and road tax then, and just keep an eye on my mileage when it is for business use. and keep all petrol receipts im assuming even though im obviously not claiming back the full amount on the receipt?

thanks

The more expenses you have then the more in HB and CTB you will be getting. The tax accountant therefore for you is free.....let's say the accountant costs £240 a year (£20 a month). You get to claim the tax accountants fees as an expense and you therefore get £20 a month more in housing and council tax benefit. Pension contributions also get you more HB and CTB so they become very tax efficient. It's not that you can't afford them as whatever you spend you will get back anyway.

You don't need the receipts. You would only need the receipts if you were VAT registered and claiming the VAT back and/or claiming a percentage of each expense.

lauram25

HappyMJ wrote: »

The more expenses you have then the more in HB and CTB you will be getting. The tax accountant therefore for you is free.....let's say the accountant costs £240 a year (£20 a month). You get to claim the tax accountants fees as an expense and you therefore get £20 a month more in housing and council tax benefit. Pension contributions also get you more HB and CTB so they become very tax efficient. It's not that you can't afford them as whatever you spend you will get back anyway.

You don't need the receipts. You would only need the receipts if you were VAT registered and claiming the VAT back and/or claiming a percentage of each expense.

ok thank you for your help and guidance, i am so new to this !

i thought i would of needed to keep the petrol receipts as i would be claiming back 45p mileage for business use and they may of wanted some proof or something.

thank you again.