UKH

I've got some questions, I am sure they are simple questions to those in the know and the HMRC site does not make things clear.

So here's a situation:

1. Person has salaried employment and the tax matters for that are all straightforward, via selfassessment online.

2. Person also does a small amount of other work as selfemployed. Pay is £X, petrol costs reimbursed to the self employed person is £Y, tax deductible expenses paid already (excluding fuel) is £Z and the cost of petrol used at 45p/mile is £W.

For the self-assessment form for the self-employed role how does this look?

Income = X 

Have to declare expenses paid by the client, Y, which is then taxable

Or is income X+Y?

Expenses tax deductible = Z + W (or just Z)?

Thanks!

In reply to nickinscottishmountains:

I have a similar situation (well, I used to until I made things complicated by having 5 different jobs...)

If your self-employed turnover is small, then you won't need to submit full figures. All you need to declare is income and expenses. You just need to keep records in case HMRC ever decide to double check.

If the client has reimbursed the expenses, then do NOT include that in the income or expenses figures (otherwise you'll be double-counting).

However if you incurred expenses that were not reimbursed by the client, then you would include those in your expenses.

Hope that helps?

In reply to Becky E:

Thank you Becky

Still puzzled by the petrol, someone said to me that petrol costs are still expenses £45p/mile) even if they are refunded by the client.

In reply to nickinscottishmountains:

Forget petrol expenses in this scenario; the 45p/mile is the amount you can charge for use of your private vehicle for business use, and is assumed to cover insurance, tax, fuel, servicing etc etc.

So, if you invoice a client £200 for a days work, and travel 50 miles providing your services, you can claim £22.50 vehicle costs as an expense. Alternatively, if you charge £200 plus expenses, you can charge £222.50, but only have taxable income of £200. If you charge the client, you cant then claim it as an expense (that would be, as you suggest, double counting).

If you charge more than 45p / mile, the difference between what you charge and 45p is taxable. Just make sure your car is insured for business purposes.

In reply to Ian W:

Thanks very much!

In reply to Ian W:

Just a little clarification with regards this. You have to both charge it and claim it, and declare it,

On the client/contractor side, charge the client £222.50 (doesn't matter how you break it down in the invoice), receive £222.50

Then on the tax side, declare £222.50 as your turnover, claim £22.50 as travel expenses, which leaves you with a taxable profit of £200 (minus whatever other expenses you may have had)

In reply to Becky E:

.

You do have to declare it. It's a zero sum game which cancels out when you do the tax return, but it has to go through the system.

If the tax people see £300 entered you bank account from the client but you only declared £200 you'll be in trouble

In reply to Mr Lopez:

But the online selfassessment forms do not have boxes for turnover, they have boxes for income/expenses. How does one declare turnover on a selfassessment form?

In reply to nickinscottishmountains:

Firstly it would help to know if you do cash basis or accruals basis accounting.

Your income is the total amount you have invoiced the client (or the total amount of cash they have transferred to you). This is what Mr Lopez calls turnover. Your expenses are all the things you have paid for. NB you can just put down a fixed £1000 so if your expenses were low I recommend doing this.

Your profit is your income minus your expenses (and any other allowances you are claiming), and is what you are actually taxed on.

In reply to nickinscottishmountains:

Your turnover is your income. Your turnover/income minus expenses is your taxable income aka profit