Top 3 allowances self employed professionals should know, but probably don’t

When you’re self-employed, it can sometimes feel like the taxman is solely out to get you.

Chasing you down like a rabid wolf, if can be a real challenge knowing where to turn, and with the stress of being self-employed on your shoulders, who needs this extra pressure?

Lucas Prestige Accountants are here to steer you clear of the taxman’s jaws, and help you organise your business accounts with ease.

Let’s start, with allowables.

We all know what expenses are.

“Put it on expenses,” “claim it back on expenses,” “have you submitted your expenses” – all commonplace in employment – but self employment expenses can you ‘claim’ back…

#1 – Mileage Tax Relief

Being, like me, self-employed, you more than likely use your vehicle for two purposes. Business and private. Sometimes it can feel like you’re never out of it!

Amongst all of this usage, there is a company expense which you can claim back.

How you go about this HMRC mileage claim, is up to you.

Use either the ‘Total Expenses method’ or the ‘Mileage Allowance method’ to determine how much you’re owed.

Both are appropriate for self-employment, so just find the routine that suits you best!

Don’t cross the streams though!

Once you’ve selected your chosen method, you can’t combine it with the other, so be sure to read up on the pros and cons of each beforehand.

#2 – Making use of your home as an office

If you’re a home-based worker, you may be able to claim back various expenses.

The main rule around the subject is: you must be able to prove that you regularly spend time working in this office space.

If a majority of your work is on-site, but you do some admin in your office at home, you won’t be eligible for these benefits.

Office equipment, computers, even furniture such as chairs or bookcases – all of this can be claimed back as long as it is deemed necessary and essential to the day-to-day running of your business.

You can claim back an allowance of £208, can claim multiple rooms if they are all being used and you can even dive into the complexities of renting your office space to your company if you so wish.

Just be sure to read up on all the HMRC rules beforehand, as claiming for disallowable expenses can be dangerous!

#3 – Household bills

We’re back at home again!

If you operate mainly from your own home, you can claim back more than just office expenses.

In fact, you can claim an appropriate portion of your:
Council Tax
Mortgage interest or rent
Internet and telephone usage

The problem you may encounter though, is nailing down the amount to apply for..

You’ll need to keep a fairly comprehensive track of the amount of time you spend working at home and the rooms you use. So if you only work from home one day a week, you can only claim back a single day of heating expenses.

As with everything in this guide, make sure you track all your self-employed expenses as well as humanly possible – this handy video is a good starting point for advice!

Lucas’ last word
Something to really take away from this guide is that the HMRC rules are always shifting and changing, so we encourage you to stay ahead of the game with Lucas Prestige Accountants!

Wear and tear allowances were reformed fairly recently, travel expenses can be a real challenge, and with government changes and Brexit uncertainty in the air, you need to be on the ball with your self-employment allowables.

Next month we’ll be providing you some accounting tips, but until then, we can handle all your accounting needs. So let’s start the conversation: 0161 375 0660.