Top 5 questions about expenses
1. Can I claim for the clothes I wear for work?
This is probably the question I get asked the most especially from sole traders who are completing their own bookkeeping and then try to sort out their self-assessment.
'Fred' down the pub is always a reliable source of info too! Isn't he??
If your work-wear is bought specifically for business use and has your branding logo on it then YES you can claim for it. e.g Polo shirts with your training company logo all over it.
If they are jeans or trainers etc you bought in a regular shop and do not solely used for business then NO you cannot.
Exceptions for this are items for Health & Safety such as steel-toe-capped work boots if they are a requirement. Other exceptions to this may be specialised trainers for Personal Trainers etc but even then it's worth checking first.
Sometimes this seems a little harsh but the rules are there and unfortunately 'Fred' is not qualified to advise you.
You may remember reading about the high profile case taken to court over whether a sex-worker's clothing could be classed as solely for business use and it was upheld - but then that is a little unusual? or maybe not??
2. How much mileage can I claim for business in my own car?
The HMRC guidelines are current 0.45p per mile for business use up to 10,000 miles per year and 0.20p thereafter. This means that you will not have to pay any Income Tax or NI on this.
If you are employed and paid an allowance by your employer that is less than 0.45p then you can choose to complete a self-assessment and gain the difference back though a refund or next years PAYE code.
You can also only claim for mileage that is not classed as 'commuting' - any travel that is regular, on the same day, at the same place for example. e.g a Personal Trainer who is contracted to deliver 2 classes a week at her local Leisure Centre cannot claim mileage from home to the Leisure Centre as it is classed as commuting (the same as an employed person)
The rules on mileage can be a very grey area especially for those who use their cars for work all of the time and I would recommend watching the HMRC webinars on this for further guidance. I regularly watch them to double check I am still current. You can book onto live ones where you can ask questions or watch recorded ones which will have lots of useful information.
3. Can I claim for my meals when I am out on business?
This one is linked quite closely with the mileage question and depends hugely on where you are working, whether it is in your usual area of work and what you are buying.
If you are grabbing a sandwich and drink on the way to your office before setting off for the day in your car then NO - you can easily take something from home.
If you are working away from your usual work area for any length of time or staying overnight then YES. This is classed as subsistence and you have no choice but to pay whatever is necessary to nourish yourself.
Alcohol is an unusual one - if you are buying alcohol along with your meal at a hotel during an overnight stay due to business then YES you can. But watch out as buying a 6-pack at the supermarket and taking it back to you room then it is a NO - HMRC expect you to be working and not enjoying yourself.
4. Why should I use software when my spreadsheet works fine?
You can indeed use a spreadsheet for now but if you are VAT registered then you need to take action NOW as Making Tax Digital is now live for those with income over £85k!
HMRC are also gearing up for MTD for Self Assessment and Corporation Tax and so we will all have to get along with the tech that is required.
You could buy some bridging software and learn how to use it but wouldn't it be so much easier if you have to learn something new, to embrace cloud software anyway?
There are many options available and the full list can be found on HMRC site but I would recommend Quick Books or Xero. They are user friendly and with some good training or a bookkeepers support you will be up and running in no time - although it is not as easy to use as TV ads would have you believe!
5. Why should I pay for a bookkeeper when I can do it myself?
I would say that if you didn't know the answer for any of the above, do not have the time to follow HMRC bulletins and webinars or don't want to, then you have my answer.
I understand that when we all start out we need to budget (I know I did) but the accounts of your business are it's life blood and no amount of enthusiasm in your product or service is going to matter if you are not on top of it.
You will not know if you have enough money to make it to the next month let alone that fantastic new idea you are itching to get started on.
I would recommend speaking to a qualified bookkeeper (such as myself) who can offer you a package to suit or training in the software you decide to use. When self-assessment time comes around it shouldn't cost as much to get everything sorted and file your return.
I do hope you have found this useful and if you want any support with your bookkeeping then find me at www.purplebookkeeping.com
Check out all the videos and webinars on the link below
https://www.gov.uk/guidance/help-and-support-if-youre-self-employed
This is probably the question I get asked the most especially from sole traders who are completing their own bookkeeping and then try to sort out their self-assessment.
'Fred' down the pub is always a reliable source of info too! Isn't he??
If your work-wear is bought specifically for business use and has your branding logo on it then YES you can claim for it. e.g Polo shirts with your training company logo all over it.
If they are jeans or trainers etc you bought in a regular shop and do not solely used for business then NO you cannot.
Exceptions for this are items for Health & Safety such as steel-toe-capped work boots if they are a requirement. Other exceptions to this may be specialised trainers for Personal Trainers etc but even then it's worth checking first.
Sometimes this seems a little harsh but the rules are there and unfortunately 'Fred' is not qualified to advise you.
You may remember reading about the high profile case taken to court over whether a sex-worker's clothing could be classed as solely for business use and it was upheld - but then that is a little unusual? or maybe not??
2. How much mileage can I claim for business in my own car?
The HMRC guidelines are current 0.45p per mile for business use up to 10,000 miles per year and 0.20p thereafter. This means that you will not have to pay any Income Tax or NI on this.
If you are employed and paid an allowance by your employer that is less than 0.45p then you can choose to complete a self-assessment and gain the difference back though a refund or next years PAYE code.You can also only claim for mileage that is not classed as 'commuting' - any travel that is regular, on the same day, at the same place for example. e.g a Personal Trainer who is contracted to deliver 2 classes a week at her local Leisure Centre cannot claim mileage from home to the Leisure Centre as it is classed as commuting (the same as an employed person)
The rules on mileage can be a very grey area especially for those who use their cars for work all of the time and I would recommend watching the HMRC webinars on this for further guidance. I regularly watch them to double check I am still current. You can book onto live ones where you can ask questions or watch recorded ones which will have lots of useful information.
3. Can I claim for my meals when I am out on business?
This one is linked quite closely with the mileage question and depends hugely on where you are working, whether it is in your usual area of work and what you are buying.
If you are grabbing a sandwich and drink on the way to your office before setting off for the day in your car then NO - you can easily take something from home.
If you are working away from your usual work area for any length of time or staying overnight then YES. This is classed as subsistence and you have no choice but to pay whatever is necessary to nourish yourself.
Alcohol is an unusual one - if you are buying alcohol along with your meal at a hotel during an overnight stay due to business then YES you can. But watch out as buying a 6-pack at the supermarket and taking it back to you room then it is a NO - HMRC expect you to be working and not enjoying yourself.
4. Why should I use software when my spreadsheet works fine?
You can indeed use a spreadsheet for now but if you are VAT registered then you need to take action NOW as Making Tax Digital is now live for those with income over £85k!
HMRC are also gearing up for MTD for Self Assessment and Corporation Tax and so we will all have to get along with the tech that is required.
You could buy some bridging software and learn how to use it but wouldn't it be so much easier if you have to learn something new, to embrace cloud software anyway?
There are many options available and the full list can be found on HMRC site but I would recommend Quick Books or Xero. They are user friendly and with some good training or a bookkeepers support you will be up and running in no time - although it is not as easy to use as TV ads would have you believe!
5. Why should I pay for a bookkeeper when I can do it myself?
I would say that if you didn't know the answer for any of the above, do not have the time to follow HMRC bulletins and webinars or don't want to, then you have my answer.
I understand that when we all start out we need to budget (I know I did) but the accounts of your business are it's life blood and no amount of enthusiasm in your product or service is going to matter if you are not on top of it.
You will not know if you have enough money to make it to the next month let alone that fantastic new idea you are itching to get started on.
I would recommend speaking to a qualified bookkeeper (such as myself) who can offer you a package to suit or training in the software you decide to use. When self-assessment time comes around it shouldn't cost as much to get everything sorted and file your return.
I do hope you have found this useful and if you want any support with your bookkeeping then find me at www.purplebookkeeping.com
Check out all the videos and webinars on the link below
https://www.gov.uk/guidance/help-and-support-if-youre-self-employed
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