Written by Joshua Danton Boyd from Crunch on 19 August 2013
As a freelancer or small business, you want to be sure you’re claiming for everything you possibly can when it comes to expenses. It all adds up in the end and a little can go a long way. So when it comes round to doing your Self Assessment, you want to be filling all those squares up with everything you’re entitled to. Here’s a look at a few you should be keeping track of over the year.
Freelance work can involve a lot of moving about whether it’s heading out for meetings or getting to your place of work. This, of course, is an essential cost and so HMRC allow you to claim for it. It does depend on the type of transport you’re using though.
If you’re travelling in a car or van, you can claim 45p for your first 10,000 miles. Following that it’s 25p. If you’re a bit more green and going by bicycle, you can claim a straight 24p per mile. That same rate applies to motorbikes too.
Of course, you might be taking public transport instead, which you’re also free to claim on too. You can even get some money back on a renting on a car: you’re able to get up to 5/7ths of the cost of that back.
On top of that you’re even welcome to claim on things like congestion and toll charges. The most important thing to keep in mind is that you need receipts for all this. HMRC aren’t exactly ones for taking people on their word alone. Also, unsurprisingly, this travel has to be solely for business and nothing else. No sneaking in a claim for a taxi back home after a night out.
If you’re working as a freelancer, you can’t claim for business entertainment such as taking a client out for a meal. This is unfortunate as there are always going to be situations where even meeting a potential client for a coffee can leave you out of pocket. Of course, this is an area most open to abuse which explains HMRC’s tough stance. It isn’t all negative though.
In some cases it may be possible to claim Input VAT on some of your costs. You’ve got to be careful though, there needs to be a clear distinction between personal and business costs. Therefore, you can only claim back on costs incurred by a client, not yourself. Here’s a few examples you can claim on:
- Provision of food and drink
- Provision of accommodation
- Theatre tickets
- Entrance to night clubs
That is by no means an exhaustive list, but it’s a matter of using common sense in the end. It’s where HMRC are strictest, so don’t waste your time trying to claim for a £3,000 bottle of champagne. Staying sensible is always your best bet.
Staring at a computer screen all day can have a damaging effect on your eyesight. This of course means that if your job involves just that, regular eye tests are a must to ensure you can continue doing your work. Because of this it can be possible to claim on the cost of tests as a business expense. Therefore, there’s no excuse to not get yourself down the opticians. If you do end up needing contacts or glasses purely for work, you can claims costs on them too.
If you work from home, you can actually claim on your costs for accommodation, but there are some strict rules surrounding it, unsurprisingly. It all depends on your set-up at home. Here’s how it works.
Let’s say you have a flat that is 5,000 square foot in size. In the flat, you have a room which is used solely for work and nothing else which is 1,000 square foot. The rent you pay per month for the entire place is £1,000. What you need to do is work out the proportion of space your work room has in regards to your entire place and apply that to the cost of rent. So, the room is a fifth of the total size and is therefore attributed a cost of £200, i.e. a fifth of the total rent. That is the amount you can claim back on your expenses.
If the room has a dual purpose, then you have to work out the amount of time the room is used for business to get your number. So, if it’s used for work 50% of the time with the example above, you’d be able to claim £100 instead.
You’re also able to claim on bills such as heating, telephone and internet. Again though, it depends on your set-up. It follows similar lines to that of accommodation costs. It all has to be proportioned out based on the amount of actual time you spend working. You obviously can’t claim all your gas bills because you do two hours of work at home every day.
As it stands at the moment, you can claim £4 a week without having to show any records to HMRC. Go over that though, and you’ll have to provide evidence as to why you should be able to get the amount you’re after.
About the Author
Joshua Danton Boyd is a copywriter for the online accountants Crunch. UKWDA members can enjoy free set-up.