Tax stuff (sorry boring!)
Discussion
Eric Mc!!Claimable expenses for employees must be "Wholly, Exclusively and NECESSARILLY for the purpose of the employment".
Normal clothes used for work DOES NOT qualify - but specialist clothing will, e.g. dedicated uniforms, safety wear (boots, goggles, hard hats etc).
Professional subscriptions are usually allowable if the subscription is in respect of a body of which you MUST be a member of in order to hold your position at work.
It is rather unusual (although not totally unknown) for employees to have to take out their own Professional Indemnity Insurance. If that is a condition of their employment, then they can claim for that too.
Normal clothes used for work DOES NOT qualify - but specialist clothing will, e.g. dedicated uniforms, safety wear (boots, goggles, hard hats etc).
Professional subscriptions are usually allowable if the subscription is in respect of a body of which you MUST be a member of in order to hold your position at work.
It is rather unusual (although not totally unknown) for employees to have to take out their own Professional Indemnity Insurance. If that is a condition of their employment, then they can claim for that too.
Edited by Eric Mc on Wednesday 13th September 18:17
Eric (or anyone else), I do contract work outside of my 9-5 and need to purchase a piece of equipment in the region of £800. Now as Im going down the self assessment route I will be declaring all my extra income at the end of the year.
Will I be able to offset the entire £800 against the tax incurred on my extra income? is there a limit?
Will I be able to offset the entire £800 against the tax incurred on my extra income? is there a limit?
polus said:
Eric (or anyone else), I do contract work outside of my 9-5 and need to purchase a piece of equipment in the region of £800. Now as Im going down the self assessment route I will be declaring all my extra income at the end of the year.
Will I be able to offset the entire £800 against the tax incurred on my extra income? is there a limit?
Will I be able to offset the entire £800 against the tax incurred on my extra income? is there a limit?
If it is equipment you will be able to claim capital allowances, 50% in the first year I believe.
Polus - when you say "Contract" work I assume you mean you are going to declare the income from this scource as income from a "Self Employment".
If that is the case I must assume that you have already taken the necsesary steps to notify HM Revenue and Customs i.e. that you contacted them within three months of the commencement of your Self Employment start up date and that you are now paying your monthly ot quarterly Class 2 National Insurance Contributions.
Obviously, you need to notify the Revenue of your Self Employment income by completing and submitting the appropriate "Self Employment Supplementary Pages" of the Self Assessment tax return.
Expenditure on items of equipment (usually referred as Capital Expenditure) is not normally claimable in full in the year in which the expenditure is incurred. The usual approach is to claim an annual percentage of this expenditure called "Capital Allowances". In the first year of expenditure, this allowance can be 40% of the initial cost of the asset. For future years, the claim amounts to 25% of the remaining reduced value brought forward each year.
Cerain assets have different types of allowances applicable to them e.g. claims for Capital Allowances on motor cars are restricted and not eligible for the 40% First Year Allowance.
Self Employed income can be reduced by offsetting expenses incurred "Wholly and Exclusively" for the purpose of the trade. You will notice that the word "necessarilly" is not included in this definoition of allowable expenses. This means that there is more scope for offsetting costs against business income than there is for offsetting costs against "Employment Income".
If that is the case I must assume that you have already taken the necsesary steps to notify HM Revenue and Customs i.e. that you contacted them within three months of the commencement of your Self Employment start up date and that you are now paying your monthly ot quarterly Class 2 National Insurance Contributions.
Obviously, you need to notify the Revenue of your Self Employment income by completing and submitting the appropriate "Self Employment Supplementary Pages" of the Self Assessment tax return.
Expenditure on items of equipment (usually referred as Capital Expenditure) is not normally claimable in full in the year in which the expenditure is incurred. The usual approach is to claim an annual percentage of this expenditure called "Capital Allowances". In the first year of expenditure, this allowance can be 40% of the initial cost of the asset. For future years, the claim amounts to 25% of the remaining reduced value brought forward each year.
Cerain assets have different types of allowances applicable to them e.g. claims for Capital Allowances on motor cars are restricted and not eligible for the 40% First Year Allowance.
Self Employed income can be reduced by offsetting expenses incurred "Wholly and Exclusively" for the purpose of the trade. You will notice that the word "necessarilly" is not included in this definoition of allowable expenses. This means that there is more scope for offsetting costs against business income than there is for offsetting costs against "Employment Income".
Eric Mc said:
Polus - when you say "Contract" work I assume you mean you are going to declare the income from this scource as income from a "Self Employment".
If that is the case I must assume that you have already taken the necsesary steps to notify HM Revenue and Customs i.e. that you contacted them within three months of the commencement of your Self Employment start up date and that you are now paying your monthly ot quarterly Class 2 National Insurance Contributions.
Obviously, you need to notify the Revenue of your Self Employment income by completing and submitting the appropriate "Self Employment Supplementary Pages" of the Self Assessment tax return.
Expenditure on items of equipment (usually referred as Capital Expenditure) is not normally claimable in full in the year in which the expenditure is incurred. The usual approach is to claim an annual percentage of this expenditure called "Capital Allowances". In the first year of expenditure, this allowance can be 40% of the initial cost of the asset. For future years, the claim amounts to 25% of the remaining reduced value brought forward each year.
Cerain assets have different types of allowances applicable to them e.g. claims for Capital Allowances on motor cars are restricted and not eligible for the 40% First Year Allowance.
Self Employed income can be reduced by offsetting expenses incurred "Wholly and Exclusively" for the purpose of the trade. You will notice that the word "necessarilly" is not included in this definoition of allowable expenses. This means that there is more scope for offsetting costs against business income than there is for offsetting costs against "Employment Income".
If that is the case I must assume that you have already taken the necsesary steps to notify HM Revenue and Customs i.e. that you contacted them within three months of the commencement of your Self Employment start up date and that you are now paying your monthly ot quarterly Class 2 National Insurance Contributions.
Obviously, you need to notify the Revenue of your Self Employment income by completing and submitting the appropriate "Self Employment Supplementary Pages" of the Self Assessment tax return.
Expenditure on items of equipment (usually referred as Capital Expenditure) is not normally claimable in full in the year in which the expenditure is incurred. The usual approach is to claim an annual percentage of this expenditure called "Capital Allowances". In the first year of expenditure, this allowance can be 40% of the initial cost of the asset. For future years, the claim amounts to 25% of the remaining reduced value brought forward each year.
Cerain assets have different types of allowances applicable to them e.g. claims for Capital Allowances on motor cars are restricted and not eligible for the 40% First Year Allowance.
Self Employed income can be reduced by offsetting expenses incurred "Wholly and Exclusively" for the purpose of the trade. You will notice that the word "necessarilly" is not included in this definoition of allowable expenses. This means that there is more scope for offsetting costs against business income than there is for offsetting costs against "Employment Income".
Sage advice. Three people who do ad-hoc work for me got fined last year for not telling HMRC they had earned.
Eric Mc said:
In the first year of expenditure, this allowance can be 40% of the initial cost of the asset. For future years, the claim amounts to 25% of the remaining reduced value brought forward each year.
Depending on when the asset was bought of course. Assets bought by a small business within the FY 2004/05 qualifies for a 50% FYA.
Yeah I have a 9-5 regular job but because I’m trying to get on the property ladder I also do work for a company through a contractor. It’s my responsibility to sort the tax out. I started work-on-the-side on the 14th of August (this year 
).
I've completed the Self Assessment form. They now have me on there records. I have just received the direct debit form for Mr Brown to bend me over some more on a weekly basis (class 2 NI collected monthly or quarterly).
The worst factor in all of this is by doing this work I move into that lovely 40% tax band
Thats a difficult one. The equipment will be used for my work only but obviously its in my home and I will use it for other stuff - not that they could seperate the two as Im a somewhat of a geek.
I was hoping of writing off as much as squeakily cleanily possible to offset as much tax as possible Oh Well.
Is there a better way of handling this rather then self assesment. I know people who have setup shell companies and pay about 1k a year to sort the books out. They only seem to pay about ~25% tax when on 70k+ The troule with me is Im not sure I want to rock my 9-5 work boat by going down that road.
Cheers for the advice Eric.
Resists the urge to rant about the slimey money grabbing bastards.
Oh I cant hold it in - Im an Engineer and while I dont mind learning the system to better my income I like designing and building technology not wasting time with all this crap.
BTW: Ive had a more straight forward answer from you then I could get out of 3 phone calls to the Inland Revenue! They kept saying "this isnt the right department for that query, ill pass you on to the corrct department" - FFS I rang the self assesment / new starters helpline! I dont blame people at all for trying to get out of paying!
"Tax doesnt have to be Tax'ing"
Arhhhh its in the name you arsehole!!!
Im done now
). I've completed the Self Assessment form. They now have me on there records. I have just received the direct debit form for Mr Brown to bend me over some more on a weekly basis (class 2 NI collected monthly or quarterly).
The worst factor in all of this is by doing this work I move into that lovely 40% tax band
Eric Mc said:
Self Employed income can be reduced by offsetting expenses incurred "Wholly and Exclusively" for the purpose of the trade. You will notice that the word "necessarilly" is not included in this definoition of allowable expenses. This means that there is more scope for offsetting costs against business income than there is for offsetting costs against "Employment Income".
Thats a difficult one. The equipment will be used for my work only but obviously its in my home and I will use it for other stuff - not that they could seperate the two as Im a somewhat of a geek.
I was hoping of writing off as much as squeakily cleanily possible to offset as much tax as possible
Oh Well. Is there a better way of handling this rather then self assesment. I know people who have setup shell companies and pay about 1k a year to sort the books out. They only seem to pay about ~25% tax when on 70k+ The troule with me is Im not sure I want to rock my 9-5 work boat by going down that road.
Cheers for the advice Eric.
Resists the urge to rant about the slimey money grabbing bastards.
Oh I cant hold it in - Im an Engineer and while I dont mind learning the system to better my income I like designing and building technology not wasting time with all this crap.
BTW: Ive had a more straight forward answer from you then I could get out of 3 phone calls to the Inland Revenue! They kept saying "this isnt the right department for that query, ill pass you on to the corrct department" - FFS I rang the self assesment / new starters helpline! I dont blame people at all for trying to get out of paying!
"Tax doesnt have to be Tax'ing"
Arhhhh its in the name you arsehole!!!
Im done now
Edited by polus on Friday 15th September 23:55
Eric Mc said:
I'd shie away from going down the Ltd Co route. Are you aware of IR35?
You need an accountant - seriously.
You need an accountant - seriously.
Edited by Eric Mc on Saturday 16th September 08:28
Yeah I know about it but was under the impression that it couldnt be used for a second income (or to that effect).
A mate gave me a link to a company who manage IR35 for you, ill have to get the url and read up more.
Edited by polus on Saturday 16th September 19:54
JagLover said:
polus said:
Eric (or anyone else), I do contract work outside of my 9-5 and need to purchase a piece of equipment in the region of £800. Now as Im going down the self assessment route I will be declaring all my extra income at the end of the year.
Will I be able to offset the entire £800 against the tax incurred on my extra income? is there a limit?
Will I be able to offset the entire £800 against the tax incurred on my extra income? is there a limit?
If it is equipment you will be able to claim capital allowances, 50% in the first year I believe.
Bear with me on this one....
At the beginning of last year it looked like we were going to move to a different part of the UK - my company was supportive of me setting up as a subbie and providing my services to them that way. I bought a high end lappie and some photo equipment as a start to this and also registered with IR as self employed sole trader in June 2005 and also pay class 2 monthly contributions. I am still employed by my original company as the big plan never came off in the end and am still registered as it gives me an opportunity to do some external work all above board. I have not had any turnover to date though and am trying to get defferment/refund on the class 2s. As I registered, I now have a tax return to fill in(my first as I am not a higher rate payer). Can I claim any of my equipment as business expenses or assets even though I have not traded(I suppose you could call it a loss of £2.5k)and if so how much. I only tend to use the lappie occasionally, working from home for my employer as that suits me, I keep it purely for editing. The camera equipment I do use a fair bit for "personal" use. What can I do if anything or should I just not claim these assets as in the next year or so nothing will really change. What happens if I claim them as assets and never have any turnover?
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