At the Tax Café we pride ourselves on being different, we tailor our services to meet each individual client’s needs so that we can add value where it’s needed most.

It isn’t just about processing paperwork to meet basic filing deadlines and tax commitments, we want to work with each of our client’s hand in hand to ensure we’re there to offer timely, efficient advice on all areas of their business.

Employees have their Income Tax deducted automatically from their employment income (usually when the company runs it’s payroll) but they may well have other tax deductible expenses which can be off-set against their income, self-employed workers are expected to file a Self-Assessment tax return to notify HMRC of any earnings.

The situation is different for Limited Companies, they pay Corporation tax on their income as opposed to Income tax, and file their returns under the CT600 return form.

HMRC suggests that you should register with them as soon as you are self-employed.  You can do this by contacting HMRC or by seeking the assistance of an accountant or tax consultant to aid you through the process.

Whilst HMRC recommends registering with immediateness, what you must actually do is ensure you register by October 5th of the business’s second tax year.  A tax year runs from the 6th April until the 5th April of the following year.

If you’ve previously registered for Self-Assessment, you can submit form CWF1 to HMRC, to retain your previous SA account.  You will need your 10 digit unique tax reference number (UTR) to do so.

If you have not previously registered, you can do so online at HMRC’s website (https://www.access.service.gov.uk/registration/email).  At which point, HMRC will then send you:

• A letter with your 10-digit UTR
• Instructions to set-up your account for the Self-Assessment online service

Aside from declaring your income to HMRC, you will also have incurred a variety of expenses, some but probably not all of which will reduce your taxable profit for the tax year.

The key to determining which expenses you can claim is determining which are allowable and this is often where things can get complicated.

 

Allowable costs might include:

• Office costs (stationary, landline telephone)
• Travel costs (fuel, parking, train, bus fares)
• The cost of clothing (work uniform)
• Staffing (subcontractors)
• Stock or raw materials
• Financial costs (business insurance or bank charges and fees)
• Business premises (rent, heating, lighting)
• Advertising or marketing (website, newspaper, social media)
• Training costs (up-skilling or refresher courses)

 

Whilst this list is not exhaustive, there are scenarios whereby an expense may become disallowable.  Take your personal mobile phone, for example.  If your yearly phone bill totals £600 (£50 per month) and you are able to calculate that half of your call usage was for business purposes, you can seek to claim £300 as an expense, but the personal usage would be disallowable.

Costs incurred in the cost of purchasing equipment, machinery or business vehicles may be eligible for capital allowances as opposed to being allowable as a trading expense. There are a number of different types of capital allowances available, and some vary where a business is making use of one of the simplification measures available to some businesses.