Not declaring expenses

camsadge

This is a bit opposite to cutting taxes but I thought this was the most appropriate section. I have started doing some part time delivering jobs using my own car. I understand that I will need to be declare this and that I can claim expenses for using my own car. Is it allowed to not claim any expenses for this. I want to increase my income to allow me to put more money into my pension and claim tax relief on this. I don't earn anything within UK so my total taxable income is below £12000. If I can increase my self employed income by more than £3600 this would allow me to put more and get tax relief on the income.

Jeremy535897

You are supposed to declare your trading profit, which would include expenses.

NSG666

Do make sure that your car insurance covers you for this type of work - it generally won't unless you have specifically asked your insurer. Many overlook it until the police seize the vehicle.

If you will be self employed then it's up to you to submit your self assessment and be able to account for your income and expenditure. HMRC might find it a bit odd if you don't have any expenses but I don't know whether it would be illegal not to declare them to gain a tax advantage in your pension.

Grumpy_chap

If your total income and expenses are low, it may be possible to use the Trading Allowance rather than actual expenses.  May or may not result in more or less tax liability.

Jeremy535897

Grumpy_chap said:

If your total income and expenses are low, it may be possible to use the Trading Allowance rather than actual expenses.  May or may not result in more or less tax liability.

That's a good point. If your expenses are higher than £1,000, you can opt to use the trading allowance instead, increasing your profit.

KingOfSnake

You'll still get basic rate tax relief on c.£2,900 of pension contributions if you do not pay any tax i.e. low income. So slipping in to the basic rate band will probably not give you any extra pensio tax relief if your expected contributions are below this.
You can also get free pension advice from The Pension Advisory Service.
https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief
https://www.gov.uk/pensions-advisory-service

Albermarle

KingOfSnake said:

You'll still get basic rate tax relief on c.£2,900 of pension contributions if you do not pay any tax i.e. low income. So slipping in to the basic rate band will probably not give you any extra pensio tax relief if your expected contributions are below this.
You can also get free pension advice from The Pension Advisory Service.
https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief
https://www.gov.uk/pensions-advisory-service

As discussed on the pensions board many times , the info on HMRC website is not correct about tax relief for low earners .
The £2880 net/£3600 gross limit is for non earners, and people earning less than £3600.
Anybody earning more than £3600 can claim tax relief on all their salary , even if they have not paid any tax , because for example they earn less than the personal allowance.
So for example someone earning £5000 pa can contribute £4000 and £1000 tax relief will be added( even though they not paid any tax ) . It is a kind of perk for low earners , if they could afford to take advantage of it of course.

It makes sense if you think about as someone earning £13000 can claim tax relief on all of it , not just the £430 over the £12570 personal allowance.