Self Employed Help....How are expenses paid back?

DaviniaJane

Hello,  I have just stepped into the world of Self Employment and have started working as a courier.  After receiving my first weeks payslip it is an utter joke what I have been paid but I am not here to moan about that. I have yet to register as Self Employed but will start doing that this week. What I can't find the answer to is how are expenses paid back to you?  There is no way I will be earning enough to be paying any tax in a year so how do I get money back for fuel etc. From what I can find out online the expenses just reduce your tax bill - Is this correct?  If this is the case then I can not continue with this job as half my wages are going on fuel.

Thank you in advance for any help with this.  I am finding it rather difficult with self employment/taxes etc!

JCS1

You can't claim expenses back, if you are self employed they are a cost to you of running the business.  Have you factored these expenses into what you charge your clients, or do they set the prices?  These expenses will reduce your profit and therefore any tax you pay, are you keeping records?

DaviniaJane

Hi JCS1,  Thanks for replying.  I am just starting off now only been working a week.  It is courier work with Hermes but they give you the job on a self employed basis.  I thought I could claim fuel as an expense when you put your self assesment/tax return in?  I will be starting records this week as I have had to borrow money for the fuel as my account is empty but from tomorrow can use my own bank account to pay for fuel and get a reciept etc.

comeandgo

Fuel is an expense, a cost that helps reduce your taxable profits but if you make no profit it's of absolutely no use to you, it just increases your loss.  Have you costed out this work to see if it is possible to make any profits?

DaviniaJane

Sorry If it was not clear....I don't mean all the money which I pay for fuel.  Google tells me you get about half the price of petrol back?

DaviniaJane

Thanks comeandgo.   I didn't see your response before i posted the above.
OMG that's bad then.  I will be making very little from this job then.  From my payslip for last week my fuel cost is about 40% of what i have earned. I have been looking for work to get out of dept and thought I would give this a go.  So I guess really only the well off are helped yet again with expenses etc.

DaviniaJane

So I wont need to register as self employed then if I wont be paying any tax or getting anything back.

comeandgo

Yes, you will need to register as self employed.  You may still make a profit, you need to look at your top line of income then you deduct your expenses, and what is left is your profit.  Remember you have to pay tax and NI on profits over 12,500.  I believe people can make a living driving for Hermes but it's hard work.

JCS1

DaviniaJane said:

Thanks comeandgo.   I didn't see your response before i posted the above.
OMG that's bad then.  I will be making very little from this job then.  From my payslip for last week my fuel cost is about 40% of what i have earned. I have been looking for work to get out of dept and thought I would give this a go.  So I guess really only the well off are helped yet again with expenses etc.

Don't understand your last comment?  Anybody who is self employed will be in the same position.

DaviniaJane

Hi JCS1,  Again,  I do find this a whole new world with taxes etc.  I have only ever been in full time work where all this is sorted for you.  I just assume that those that earn above or at the tax limit who can put expenses through are helped where as me who will be under that limit will have a huge chunk - between 40 and 50 % of what i earn on fuel doing my job.  So possibly with the figure comeandgo mentioned above - If i was doing well and earned 12,550 i would not pay much tax on that i guess but i could claim back almost half my fuel costs.  Whereas if i was earning 12,400 I get no help and say goodbye to nearly half my wages. 

JCS1

Those earning above £12,500 still have the same expenses but also have to pay tax too.  HMRC used to run workshops for people who were self employed, not sure if they still do (no doubt postponed at the moment), but might be worth investigating if you are planning on being self employed for a while.