allowable expenses

arsenalboy

Can anybody tell me of any good books out there that tell you all the tricks of how to minimise your personal tax by legitimate deductions that the IR wont tell you about.
I am just about to go self employed and am fairly numerate and therefore haven't gone for the expense of an accountant.
I know that you can claim any expenditure incurred but is knowing the marginal stuff. A friend tells me that you can claim £5 a day for lunch without a receipt. If I work 200 days in a year that is £1000 to set against income, if my tax rate is 40% then that is £400 saved?
So how many more of these tips (loopholes) are there and is there a good book?

Bean_Counter

I believe that you might have been misinformed on the £5 claim for a start. The £5 is a tax-free allowance if an employee is away from home on business overnight and is designed to cover personal expenses such as newspapers and telephone calls (ITEPA 2003 s241.)

Check out some other threads here for ideas.

Good luck with first HMRC visit!

longforgotten

I'm so impressed by the number of self-employed people on this site who hve the confidence to do the accounts themselves and file self assessment. They feel its ok not to have an accountant.

I work for an accountant preparing accounts, have done for over twenty years, yet if I ever became self-employed I would do the accounts myself obviously, but I would most definitely send the accounts to an accountant and have them do the self-assessment forms.

A good accountant is peace of mind big time !

Bean_Counter

longforgotten wrote: »

I'm so impressed by the number of self-employed people on this site who hve the confidence to do the accounts themselves and file self assessment. They feel its ok not to have an accountant.

I work for an accountant preparing accounts, have done for over twenty years, yet if I ever became self-employed I would do the accounts myself obviously, but I would most definitely send the accounts to an accountant and have them do the self-assessment forms.

A good accountant is peace of mind big time !

It would be interesting to see the proportion of those who have had a HMRC visit relative to those who have merely submitted but with no queries. Some of the latter might get a shock one day.

WHA

Bean_Counter wrote: »

It would be interesting to see the proportion of those who have had a HMRC visit relative to those who have merely submitted but with no queries. Some of the latter might get a shock one day.

I quite agree. Unfortunately, many people make the mistake of thinking their tax affairs have been agreed when they get the tax return acknowledgment and/or tax computation back from HMRC. They don't realise that it is nothing more than an acknowledgement - you could put any numbers on the tax return and it would still be acknowledged and processed as long as there were numbers in the expected boxes. More unfortunate still are those who take their tax returns into the local tax office and are "helped" to complete them by the CS staff, who again, aren't trained to question what they're being told - all they're doing is putting numbers in boxes.

I have had many new clients who have been extremely shocked when they have been the subject of a formal enquiry to find just how wrong their tax returns have been, especially where they have phoned or visited the tax office for help. They are even more shocked at just how deep the proper tax inspectors delve into their affairs and the level of back-up information they need.

The above example of the £5 per day meal allowance is a classic example of the "bar room" accountancy advice. Because someone has claimed it on their own tax return, and it hasn't been questioned, they think it was allowed, and start telling everyone else to do the same, whereas the reality is that the tax inspector just hasn't bothered selecting that return for proper enquiry and therefore hasn't asked the circumstances under which the claim was made.

This was the inevitable consequence of "self assessment" brought in about 10 years ago to reduce HMRC staff workload - the onus of proof and calculations was transferred from the tax office staff to the taxpayer - now the taxpayer has to work out what is allowed and what isn't, and work out their own tax. Severe dumbing-down has occured within the tax offices to the extent that in most cases your tax return won't be looked at by a proper inspector, and will simply be "keyed in" by a keyboard operator with very little knowledge of tax. Only a very small sample of tax returns are looked at by the proper inspectors. But when you do get picked, you certainly know about it, and if the inspector finds something in your latest tax return, he can then go back to the previous six years, or if there is deliberate evasion, can go back 20 years.

TurnaroundSue

I am self employed and do my own accounts, as I was put off by the fact I was told on a HMRC training day, that if my accounts are wrong and it is done by an accountant, it is me who is liable and NOT the accountant - which I thought was really unfair, coz I thought that it what you pay them for!!

longforgotten

Maybe so TurnaroundSue, but the likelihood of a mistake is much less than if you do it yourself.

I know HMRC also take it into account that the mistake is not yours, that you did actually give your accountant all the information and therefore they should have done it properly. They will look more leniently upon it than if you made the mistake yourself.

2020_2

one of the questions was are there any books out there to help? i would really appreciate it if there was!! names and authors please!!

longforgotten

If one book exists it'll be that thick ( as in heavy ) you could not pick it up

johnllew

20/20 wrote: »

one of the questions was are there any books out there to help? i would really appreciate it if there was!! names and authors please!!

You could try the Revenue's own Business Income manual:

General rules: http://www.hmrc.gov.uk/manuals/bimmanual/BIM40000.htm

Particular trades: http://www.hmrc.gov.uk/manuals/bimmanual/BIM50000.htm

tobiascurious

Well, it's an old thread, but...

I'm not self-employed but have a self-assessment tax return to do. I was an agency temp for part of this period and was wondering about allowable expenses.

I was working and living away from home, firstly in one town for 1 month, and then I was moved to a second town, for 2 months, and then back to the first town for 1 month, all as part of the same contract.

I'd like to know how to find out about whether the accommodation and travel expenses are tax-deductible. The agency wouldn't reimburse these expenses. I was working through agency PAYE, not as a contractor.

I guess it's something to do with where my normal place of work is considered as.