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"What you can claim tax relief on", simple guide?
Comments
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UpToMyNeckInIt wrote: »As a sole trader, you can claim 100% of your mobile, it's a bit different when working as a limited company.
Yes, you do have to eat anyway, but usually at home. Thus anything you consume at work is tax deductible. Particularly if it would not be reasonable to expect you to travel home for lunch etc.
Nobody is forcing you to claim though, and if you feel that not doing so is fair, then nobody will argue with that.
You can claim 100% of your mobile costs, not 75% as you suggested in your first post - the op clearly stated self-employment. However, from my experience on both sides of the fence, HMRC are less likely to look at a set of accounts with, say, a 5-10% add back for private use. Who can honestly say that they absolutely NEVER use their mobile privately.
Your approach to claiming for eating at work as a self-employed person is certainly interesting and appears to be based somewhat on the fact that you have yet to be queried on it. If you can categorically point to the legislation which permits such a deduction I will gladly hold my hands up. Unfortunately, I can only quote from HMRC:
The cost of food and drink consumed, and accommodation used, by a trader is not in general an expense incurred wholly and exclusively for the purposes of the trade, since everyone must eat in order to live. Such costs are (either wholly or partly) normal costs of living incurred by all and not for the purposes of trading, see BIM37900 onwards.
Where such costs are disallowable they cannot be apportioned to allow extra costs incurred from the necessity of lunching away from home or the place of business. There is no identifiable part or proportion of the expense which is incurred wholly and exclusively for trade purposes.There are 10 types of people in the world - those who understand binary and those who do not. :doh:0 -
Just to add to what purdyoaten says, as referenced in the links I posted previously, there does appear to be some provision for claiming meals when self-employed if you're an itinerant worker or your travel is exceptional to your normal work pattern but that is all and I'd expect any claims for food to be scrutinised during an enquiry as the allowances do seem very restrictive.
As I said, be careful with "duality of purpose". Unless there is a specific rule that says otherwise, the general rule of "wholly and exclusively" is a good one to follow.0 -
TheCyclingProgrammer wrote: »Just to add to what purdyoaten says, as referenced in the links I posted previously, .
Yes - you did. I should have mentioned that.:)There are 10 types of people in the world - those who understand binary and those who do not. :doh:0 -
Interesting article on the Taxation website re itinerant workers:-
http://www.taxation.co.uk/taxation/Articles/2012/05/09/39091/what-pantomime0 -
...Very interesting to see the differing views of claiming food (or shall we call it 'subsistence allowance'?).
I am your classic itinerant/peripatetic contractor. So maybe the rules are slightly different for my company (Me) to say, a contractor who is based at an office with a canteen or whatever.
Looking at my last set of Company Financial Statements, my accountant has 'buried' subsistence in a category called 'Sundry Expenses' and 'Motor and Travelling' expenses.
But this is the 3rd Accountant I have used in 8 Years, and all have suggested I put in my food receipts. But aside from VATable food, where of course I only pay the Net amount, I am uncertain just how much further corporation tax relief is being applied.
However it is clear (sort of) from HMRC's website:
http://www.hmrc.gov.uk/incometax/relief-travel.htm
which quotes:
'Travel and subsistence expenses that qualify for relief
...public transport fares
hotel accommodation where you have had to stay overnight as a part of a business journey that qualifies for tax relief
meals you have had to purchase whilst travelling or staying overnight
tolls
congestion charges
parking fees
business phone calls, fax or photocopying costs
business mileage'
that you CAN claim tax relief on 'meals' in certain circumstances.
I hasten to add, that in 'claiming' against food (and anything else for that matter), the brief I give my accountant is that I want to pay the least amount of Tax/NI that I can get away with, whilst preserving my state pension etc. And without doing anything remotely dodgy to arouse the interests of HMRC.
It does not help of course that HMRC have so many complicated 'rules' of one form or another, that it is quite impossible for the average joe to get their head around. It is little wonder that there are so many 'loopholes' that a decent accountant is oh so good at exploiting. It seems as well that for every loophole HMRC close, another one opens.0 -
purdyoaten wrote: »You can claim 100% of your mobile costs, not 75% as you suggested in your first post - the op clearly stated self-employment. However, from my experience on both sides of the fence, HMRC are less likely to look at a set of accounts with, say, a 5-10% add back for private use. Who can honestly say that they absolutely NEVER use their mobile privately.
Your approach to claiming for eating at work as a self-employed person is certainly interesting and appears to be based somewhat on the fact that you have yet to be queried on it. If you can categorically point to the legislation which permits such a deduction I will gladly hold my hands up. Unfortunately, I can only quote from HMRC:
The cost of food and drink consumed, and accommodation used, by a trader is not in general an expense incurred wholly and exclusively for the purposes of the trade, since everyone must eat in order to live. Such costs are (either wholly or partly) normal costs of living incurred by all and not for the purposes of trading, see BIM37900 onwards.
Where such costs are disallowable they cannot be apportioned to allow extra costs incurred from the necessity of lunching away from home or the place of business. There is no identifiable part or proportion of the expense which is incurred wholly and exclusively for trade purposes.
...As I have both a personal and a business mobile, I think claiming 100% of my personal one is a bit of a liberty, and as we are only talking a difference of £6pcm, I'm not really that bothered. Frankly, I think being able to claim 75% is very generous. My accountant is quite insistent that I can do so. So who am I to argue? I very much place a lot of faith in my accountant.0 -
UpToMyNeckInIt: you've just demonstrated why it's important to get he details right. This thread is discussing self employed expenses, not employee expenses. The rules are different.
First you say you've been self employed for 8 years and now you say you have a Ltd company (you mentioned corporation tax). So you aren't self employed.
If you are a director of your own Ltd company, like any employee you can claim for subsistence related to business journeys and travel to a temporary workplace. For regular business travel for meetings etc. it's fairly simple. But if you're working at temporary workplaces, yiur subsistence and accommodation are only claimable as long as the travel is claimable which means applying the various rules regarding travel to temporary workplaces, particularly the 40%/24 month rule.
Everything that has been said with regards to claiming food if you're self employed is correct. It can only be claimed in very limited circumstances. Employees have a bit of an advantage on this one.
Personally I'd say employee expenses would be better suited to Staff Costs but IANAA. Either way, don't forget that your expense payments for travel and subsistence need to be reported on your P11D unless you have a dispensation and you need to claim relief on these payments personally on your tax return.0 -
UpToMyNeckInIt wrote: »...As I have both a personal and a business mobile, I think claiming 100% of my personal one is a bit of a liberty, and as we are only talking a difference of £6pcm, I'm not really that bothered. Frankly, I think being able to claim 75% is very generous. My accountant is quite insistent that I can do so. So who am I to argue? I very much place a lot of faith in my accountant.
If you operate through a Ltd company, then YourCo can provide you (and any of its employees) with one mobile phone for both business and personal use. There is no need to apportion the cost, so long as the contract is in YourCo's name.
YourCo can buy both the handset and pay the monthly contract, or you could use your existing handset and YourCo can pay for the contract (but it can't pay for a contract that is in your name without there being a BIK). There is no BIK, nothing to report on a P11D and both the contract and handset cost are allowable deductions for corporation tax (although you may choose to capitalise the handset, I do).
YourCo can also provide as many phones as it wants to employees so long as they are wholly and exclusively for business purposes and not for personal use.
Do note that the only costs YourCo can cover if the mobile contract is in your own name is the cost of individual business calls (which need to be reported on your P11D). Any payment towards your personal contract from YourCo, either directly or as an expense claim will incur a BIK charge.0 -
UpToMyNeckInIt wrote: »I've only been self employed for 8 years, passing on what I have been professionally advised by a chartered accountant, so doubt all you want, or seek professional advice. So I do know.
Can even find all this stuff on HMRCs website.
Makes a bit of a nonsense of this post.
Not self-employed at all.
Accountant has not relayed this as part of professional advice - I would not be placing much faith in him/her.
So you don't know.
You are correct though - freely available on HMRC website.
It may be an idea to change your signature as you are not, as you state, self-employed.There are 10 types of people in the world - those who understand binary and those who do not. :doh:0 -
purdyoaten wrote: »Makes a bit of a nonsense of this post.
Not self-employed at all.
Accountant has not relayed this as part of professional advice - I would not be placing much faith in him/her.
So you don't know.
You are correct though - freely available on HMRC website.
It may be an idea to change your signature as you are not, as you state, self-employed.
That is an interesting point, and perhaps I am guilty of not properly explaining my situation, but not really relevant to the title of this thread.
You are right in that technically, I am an employee of my own Limited company. So whilst 'I' and 'my company are on paper 2 entirely separate legal entities, in reality we are one and the same.
I could cease trading, and continue my work as a sole trader in a heartbeat if that makes any difference (I know, it does and yes, I used to, but 'going LTD' is a more tax efficient way for me to earn).
Please don't give me the IR35 lecture either.
Saying that, if I don't work, i don't get paid. I am free to pick and choose who I work for, have to invoice my clients etc... Just the same as if I were a self-employed sole trader.
When I explain my situation to insurers, mortgage companies and my IVA provider etc... they UNANIMOUSLY agree that I fall within their definition of 'self-employed'.
It's no use me trying to fiddle things: If I claim to an insurer that I am an employee, they ask:
Q 'Who do you work for?'.
A '...er, 'My Company Ltd' at my Home address'.
Q 'Work phone number?'
A 'Same as my personal one'
...and I just love showing payslips to mortgage companies, asking me to explain why, despite being an employee, I pay no income tax/NI.
...You get the idea.
Now if you are who someone here claims you are / were, I suspect you know of these dilemmas, but cannot see past HMRC red tape definitions.0
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