How much expenses is too much?

[rj1986]

So it's Self Assessment time again.

This year i worked 6 months FT PAYE, with S.E. on the weekends/ when needed, and 6 months S.E. flat out.

So after adding all of the expenses together and doing various percentages for pro-rata, and having a fairly expensive year on the car (new tyres, pads and discs all round, major service, minor repairs, fluids etc) plus 6 months of train travel and expenses in London, my expenses add up to about 29-30% of my income across both jobs.

Whilst i'm all for lowering my tax bill, and can prove most/all of the figures via various receipts, do you think HMRC might think "Hang on a second?" - or am i just being paranoid?

Thanks in advance.

[Trailhead]

Are you sure expenses on your presumably private car are tax deductible? Normally you would charge 45ppm for qualifying journeys if the vehicle is not owned by the business.

[rj1986]

I've taken a considerable chunk out for private use including fuel.
As i started deducting the car expenditure rather than the 45ppm when i was fully SE a few years ago, i can't switch back

[ellroy]

If your expenses are true then it doesn't matter a jot what HMRC think, they're legitimate.

I would imagine for many start ups that more expenses than income is relatively normal as a set of accounts in the first year or two in any case.

[rj1986]

ellroy said:

If your expenses are true then it doesn't matter a jot what HMRC think, they're legitimate.

I would imagine for many start ups that more expenses than income is relatively normal as a set of accounts in the first year or two in any case.

Cheers.

it's my proper 2nd stint as SE, the 1st being about 4 years ago, and the rest just being weekend and a few days here and there (with not a jot last year), and the car expenses are coming in higher than any other year.

[Eric Mc]

If the expenditure has been incurred "wholly and exclusively for the purpose of the trade", then the expenditure can legitimately be claimed.

If the expenditure has a dual nature to it, i.e. part business part personal;, then a reasonable technique should be used to split the costs and claim only the business related element against your trading profits.

For motoring costs where your personal car is used for both business and private, two techniques can be used - both based on mileage.

The simplest technique is to not bother retaining any motoring expense evidence such as receipts, vouchers, cheque stubbs etc but simply apply 45p per mile to every business mile undertaken up to 10,000 miles. 25p is applied to business mileage over 10,000.

Alternatively, you should record and retain evidence for EVERY motoring related cost (fuel, repairs, MOT, insurance, car tax etc), total these costs for the year and then claim the proportion of these costs based on business mileage versus total mileage.

[bogwoppit]

You're not counting commuting costs are you?

[Sheepshanks]

bogwoppit said:

You're not counting commuting costs are you?

He's self-employed. Different set of rules to PAYE.

[Eric Mc]

Not that different.

Read the case of Samadian v HMRC.

[bogwoppit]

Sheepshanks said:

He's self-employed. Different set of rules to PAYE.

No, he said he's done both PAYE and SE this year. And neither set of rules allow you to reclaim costs of commuting to your regular place of work. If find it amazing that he manages to spend that much on business travel but it of course depends on his setup (e.g. if he is constantly going to different places for business meetings but they all happen to be in London).