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Allowable expenses
Thread poster: xxxEwa Frok
xxxEwa Frok
Local time: 22:12
English to Polish
+ ...
Feb 7, 2007

Hi,
what sort of expenses can I deduct for tax purposes as self-employed UK based translator/interpreter?
Many thanks for your help.


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Kevin Harper  Identity Verified
United Kingdom
Local time: 22:12
German to English
+ ...
See HMRC Feb 7, 2007

The HMRC website has a lot of information on the general things you can claim and which box to put them in on your tax form. You can also write to them for specific advice - but a tax adviser may be more impartial.

Apart from administration expenses, this includes either the expenses of your separate office (or a proportion of your domestic expenses, if you work from home). You can also claim financial charges and interest on business loans.

Specific to translating, you can claim for relevant hardware, software and dictionaries. However, these items may have to be claimed over several years as capital allowances if they are (or their value) is not consumed within a year.

For anything further than this basic outline, you should contact HMRC or a tax adviser.


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Jenny Forbes  Identity Verified
Local time: 22:12
Member (2006)
French to English
+ ...
Other claimable items Feb 7, 2007

Kevin Harper wrote:

The HMRC website has a lot of information on the general things you can claim and which box to put them in on your tax form. You can also write to them for specific advice - but a tax adviser may be more impartial.

Apart from administration expenses, this includes either the expenses of your separate office (or a proportion of your domestic expenses, if you work from home). You can also claim financial charges and interest on business loans.

Specific to translating, you can claim for relevant hardware, software and dictionaries. However, these items may have to be claimed over several years as capital allowances if they are (or their value) is not consumed within a year.

For anything further than this basic outline, you should contact HMRC or a tax adviser.


I agree that it's best to consult a tax adviser or accountant for your first year's accounts at least, or telephone your local Inland Revenue office - they're surprisingly human as a rule.
You can also claim for business stationery and postage, and a suitable proportion of your telephone / fax / email bill (if you work from home - or all of it, I suppose, if you have a dedicated office elsewhere).
Best of luck,
Jenny.


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Marion Lurf  Identity Verified
United Kingdom
Local time: 22:12
English to German
+ ...
Additional info Feb 7, 2007

I second what Kevin and Jenny said - the HMRC website contains lots of information and you receive valuable advice when phoning the helpline. I just wanted to add two points about allowable expenses:

- email/internet: When I spoke to the IR helpline about a month ago, the adviser explicitly told me that you are NOT allowed to deduct your broadband bill "because usage cannot be monitored" - not even a certain percentage of the total! You can of course deduct dial-up expenses.
However, since my business is 99% internet based and I hardly ever use the phone (which is deductible), I informed him I was going to include a certain sum for the internet after all. This is fine as long as you are prepared to justify it upon request. I think it is very unfair for professions like ours not to be allowed to deduct any expenses for one of our most indispensable resources - and I am willing to "fight" if needed.

- transport: Apart from public transport tickets, don't forget you can claim 40p per mile if you travel to a place of work in your own car (no other fuel expenses, insurance etc are deductible in that case).

Hope this helps. Good luck! You will find out that a tax return is not as hard as it seems.

Marion


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Peter Linton  Identity Verified
Local time: 22:12
Member (2002)
Swedish to English
+ ...
More about expenses Feb 7, 2007

Marion Lurf wrote
...you are NOT allowed to deduct your broadband bill "because usage cannot be monitored" - not even a certain percentage of the total!


You are of course right to object, but I think we need to recognize HMRC's attitude that the expense needs to be 100% used for business. So the simple answer to your issue is to have a separate business line with broadband. That is fully deductible, and may also benefit your customers.

]
Don't forget you can claim 40p per mile if you travel to a place of work in your own car

...and you can claim 20p a mile for using a bicycle on business.

Incidentally, you can even claim a proportion of UK Council Tax.

As I mentioned in another answer today http://www.proz.com/topic/65360
you have just missed a very useful and interesting talk about claimable expenses. HMRC are actually much more understanding and generous than you might expect -- as long as you observe their rules about expenses being strictly and demonstrably for business only.


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Burrell  Identity Verified
United Kingdom
Local time: 22:12
Member (2004)
English to Latvian
+ ...
Council tax? Feb 7, 2007

Peter Linton wrote:


Incidentally, you can even claim a proportion of UK Council Tax.




Can you tell a bit more about this?

Cheers,
Ines


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Marion Lurf  Identity Verified
United Kingdom
Local time: 22:12
English to German
+ ...
Broadband Feb 7, 2007

Peter Linton wrote:
You are of course right to object, but I think we need to recognize HMRC's attitude that the expense needs to be 100% used for business. So the simple answer to your issue is to have a separate business line with broadband. That is fully deductible, and may also benefit your customers.

I do see your (and HMRC's) point, but frankly, why don't they in that case also require separate utilities accounts for people working from home, but instead allow you to deduct a certain proportion of e.g. your gas bill?
Plus, I do not see the potential benefit to my clients either. As opposed to a separate phone/fax line, which does make sense from a business point of view, customers do not see how I connect to the internet. Whether or not I share my internet access etc does not have any influence on my business.
Maybe it will just take a while for HMRC to recognise that broadband is today's standard.

Marion

PS: I would also like to hear more about the Council Tax issue, Peter.


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Claire Cox
United Kingdom
Local time: 22:12
French to English
+ ...
Council tax? Feb 7, 2007

My accountant tells me that I cannot claim for council tax as I would have to pay that anyway, whether or not I'm working at home. A proportion of heating/electricity bills can however be claimed as obviously you're using heat/power that you would otherwise not be using. I calculate by dividing the bills on the basis of the number of main rooms in the house (not bathrooms, kitchen, utility rooms, hallways, etc.) and then dividing the figure by the proportional usage of my office for work. I.e. if there are six rooms in the house and you use one of these for (say) 75% of the time for business use, then you can charge 12.5% of the total as a business expense. Don't claim for 100% use of a room as this can cause problems with capital gains tax if you come to move - I'm sure you or someone else in the house uses it for other purposes as well!

I also claim for buildings/contents insurance on the same basis as you have to declare that you work from home for insurance purposes and this therefore affects your premium.

Hope this helps!


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xxxEwa Frok
Local time: 22:12
English to Polish
+ ...
TOPIC STARTER
Thank you for your help and just one more question: Feb 7, 2007

How about:
1. Business suit/shoes I only use for court. I do not have any other use for them outside the courtroom.
2. Travel expenses when I go to my native country to keep up with the developments and have some practice with my mother tongue.


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Peter Linton  Identity Verified
Local time: 22:12
Member (2002)
Swedish to English
+ ...
Answers to EvaFrok Feb 7, 2007

EwaFrok wrote:
How about:
1. Business suit/shoes I only use for court. I do not have any other use for them outside the courtroom.

Don't know.

2. Travel expenses when I go to my native country to keep up with the developments and have some practice with my mother tongue.

Yes, allowable PROVIDED your trip is 100% business. VIsiting your family means it is not 100% business. Keep the trips separaate.


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Peter Linton  Identity Verified
Local time: 22:12
Member (2002)
Swedish to English
+ ...
More about Couincil Tax Feb 7, 2007

I was also surprised when he mentioned Council Tax, but the man from HMRC said that any expense that enables you to do business is allowable. He specifically mentioned Council Tax. But your local office may disagree.

Follow-up reply to Marion Lurf: HMRC have no objection to broadband. Their objection is to expenses that are not 100% for business. I am not here to defend HMRC -- only to pass on what I was told.


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Charlie Bavington  Identity Verified
Local time: 22:12
French to English
Other resources Feb 7, 2007

Various newspapers publish guides on self assessment, which usually include a chapter or three on self-employment.

Hard and fast rules are difficult to give on a forum without knowing your full situation, but, having a dedicated office & consequently renting a property with one room more than I otherwise would, I can tell you that AFAIK you can claim a proportion (as Claire said) of both council tax and landline subscriptions. The books I mentioned explain it all (as I'm sure the website does!).

Note too that useful notes are sent along with the SA form itself.

EwaFrok wrote:

1. Business suit/shoes I only use for court. I do not have any other use for them outside the courtroom.


My understanding, having enquired of an accountant in the past about precisely this point with regard to office wear (suit & tie), is that no, they are not deductible. You could use them for non-work reasons - that is the reason I was given. Only clothing that is specifically designed for work use, e.g. protective clothing, is deductible, generally.

As for trips home, ask Burrell - I seem to recall she posted something a while ago saying she was claiming for trips to Latvia to see her family. This surprised me on more than one level, but if it is genuinely allowed...


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Margaret Lomas
Local time: 22:12
French to English
+ ...
Clothes for court not allowable Feb 9, 2007

EwaFrok wrote:

How about:
1. Business suit/shoes I only use for court. I do not have any other use for them outside the courtroom.
2. Travel expenses when I go to my native country to keep up with the developments and have some practice with my mother tongue.


My understanding is that your business suit/shoes are not allowable. Expenditure is not allowable if it reflects more than one purpose (this is called the duality test). There was a case in 1983 where a lady barrister tried to claim for black clothing to be worn in court. It wasn't allowed because it was found that the expenditure was for the dual purpose of enabling the barrister to be 'warmly and properly clad' as well as meeting her professional requirements.

Hope this helps.

Margaret


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