Freelance Expenses and Tax Confusion - Please Help!

CinnamonGirl_2

I'm preparing to complete my first ever tax return and I'm a little confused over expenses.

Some of the work I do freelance (delivering workshops) is paid at a daily rate plus travel expenses (45p per mile for the first 40 miles and then 25p per mile, plus parking, etc)

I'm not sure whether I need to include the travel expenses as 'income' and although I've searched I can't find an answer - I know I can subtract travel expenses from profit for the ordinary freelance work I do but this is different.

Your help/ advice/ expertise would be very much appreciated! Thank you.

Wywth

CinnamonGirl wrote: »

I'm preparing to complete my first ever tax return and I'm a little confused over expenses.

Some of the work I do freelance (delivering workshops) is paid at a daily rate plus travel expenses (45p per mile for the first 40 miles and then 25p per mile, plus parking, etc)

I'm not sure whether I need to include the travel expenses as 'income' and although I've searched I can't find an answer - I know I can subtract travel expenses from profit for the ordinary freelance work I do but this is different.

Your help/ advice/ expertise would be very much appreciated! Thank you.

If you are paid expenses by the company, then it sounds like you are employed by them.

However, if you invoice for the expenditure of supply (as per a contract) then you should compile business accounts detailing revenue received, operational expenses, cost of supply, etc..

CinnamonGirl_2

Thanks, Wywth.

I have to confess I don't really understand what you say I should do for compiling business accounts (sorry - I really AM that dense!) or whether the mileage payment is income and therefore taxable or not?

Sometimes expenses include parking, etc, which I've already paid out for in advance.

This company make us sign a contract saying they are NOT our employer and we're responsible for our own tax, etc. The fee and expenses are both listed individually on the invoice.

martindow

CinnamonGirl wrote: »

This company make us sign a contract saying they are NOT our employer and we're responsible for our own tax, etc. The fee and expenses are both listed individually on the invoice.

They cannot decide whether it is employment or you are self employed - this is determined by the nature of the work.

Have a look at this page to see what your work is

http://www.hmrc.gov.uk/employment-status/

Pennywise

The employment versus self employment issue is the "employer's" risk not the workers, so if the employer are happy to pay on a self employed basis, then let them - it's them that will suffer if they're found by HMRC to be employees, so let that argument be put aside.

The income the OP receives for her mileage and parking etc needs to be included in her sales/turnover. But, the expenses are allowable deductions under travelling expenses, so no overall tax effect. In the end she doesn't get tax relief on her travel costs because she's been reimbursed, likewise the income isn't taxable because there are identical costs to set against it. Neutral position cash flow wise and tax wise.

CinnamonGirl_2

Thanks both for your help

Pennywise: I'm *finally* clear on it! Thank you :j