Filling your Tax Return in the UK: Allowable business expenses?
Thread poster: Charlotte Boudon
Charlotte Boudon  Identity Verified
Local time: 03:24
English to French
Jun 9, 2010

Hi there,

What do you guys claim as business expenses when doing your Tax Return? I'll be doing my 2nd one this year and it occurred to me that there might be things I didn't think about last year.

Would the following be allowed?

• Renewing my ProZ subscription (or any other similar site)
• Upgrading to a newer version of Trados
• Buying any Windows-related software when owning a Mac
• Having to buy a new computer

I'm really interested in this because I'm sure there are a lot of things I just wouldn't think about.

Thanks in advance for any help you can give.


Direct link Reply with quote
 
Charlie Bavington  Identity Verified
Local time: 03:24
French to English
Library books Jun 9, 2010

Several newspapers publish annual tax guides (Mail and Telegraph, at least) which have chapters on what can and can't be claimed by the self employed. They are a good starting point. There are also a couple of books in the "... for Dummies" series which are very useful.
And at the risk of sounding patronising, from the questions you are asking, I recommend you start with the basic stuff first.

The key words are "wholly and exclusively".

There are also hmrc's website, various business advice sites, and indeed this forum's very own search function. Oh, and accountants, too, of course.


Direct link Reply with quote
 
Charlotte Boudon  Identity Verified
Local time: 03:24
English to French
TOPIC STARTER
RE: Library books Jun 9, 2010

I have looked at the HMRC website and searched this forum to some extent but a lot of it is going right over my head and I guess all I asked for was a few concrete examples.

Direct link Reply with quote
 

Alex Eames
Local time: 03:24
English to Polish
+ ...
everything you can justify Jun 9, 2010

Charlotte Boudon wrote:

Hi there,

What do you guys claim as business expenses when doing your Tax Return?


Everything you can justify, should be claimed.


Would the following be allowed?

• Renewing my ProZ subscription (or any other similar site)
• Upgrading to a newer version of Trados
• Buying any Windows-related software when owning a Mac
• Having to buy a new computer


All those things are allowable, but the new computer is a capital allowance rather than an expense.

The way our accountant explained it to us a few years back was that if you can defend an expense, you should claim it. If you can see yourself as able to justify it to an inspector if you get investigated, then claim it.

For example. Foreign language TV channels are easily justified as they enable you to stay linguistically and culturally fluent in your source or target language.

I wrote a tranfree article about it a few years ago and there have been a few ProZ threads about it too.

Hope this helps

Alex Eames
http://www.translatortips.com
helping translators do better business


Direct link Reply with quote
 
Charlotte Boudon  Identity Verified
Local time: 03:24
English to French
TOPIC STARTER
Re: everything you can justify Jun 9, 2010

Thanks a lot, Alex, that makes more sense now.

I'll try to do some more research about it.


Direct link Reply with quote
 

Marijke Singer  Identity Verified
United Kingdom
Local time: 03:24
Dutch to English
+ ...
Invest in an accountant Jun 9, 2010

Charlotte Boudon wrote:

Thanks a lot, Alex, that makes more sense now.

I'll try to do some more research about it.


Keep your own books and at the end of the year let an accountant do your tax returns. He/she will know exactly what you can claim and will usually save you money. His fees are also tax deductable. Wise investment.


Direct link Reply with quote
 
Charlie Bavington  Identity Verified
Local time: 03:24
French to English
Fair enough Jun 9, 2010

Charlotte Boudon wrote:

I have looked at the HMRC website and searched this forum to some extent but a lot of it is going right over my head and I guess all I asked for was a few concrete examples.


It can be a bit intimidating if you're not that way inclined. I would recommend you start with the general (i.e. get an understanding on the basic rules) and then move to the specific, rather than hoping to extrapolate the general on the basis of specific examples such as the questions you asked. While there are undoubtedly other and possibly better sources, IMHO the "... for Dummies" series covers the ground pretty well, as I recall.


Direct link Reply with quote
 
Charlie Bavington  Identity Verified
Local time: 03:24
French to English
Claimed - but will it be accepted?? :-) Jun 9, 2010

Alex & Malgorzata Eames wrote:

Everything you can justify, should be claimed.



I would not disagree with that as a starting point, but I think it only fair to point out the situation is not as black & white as that, and just because you or I think it's justified doesn't mean the revenue will agree. There are some decisions here, for example, that make me frown.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM37900.htm


Or for example here:
http://www.hmrc.gov.uk/manuals/bimmanual/BIM35660.htm
which I was pointed to by the IoL - this is a gem. I was (am) looking at the Univ of Westminsters MA in Legal Translation. Pay the 5 grand for the whole shebang in one pop to get the MA - not allowable. Do the modules individually (and not get the MA) -> viewed as CPD, and is allowable. The same person learning the same stuff at the same place for the same reason - viewed differently. Once you delve into it, I can kind of see hmrc's logic, but I have to say that if I hadn't known this, I'd've claimed for the 5 grand because it seems evidently justifiable, and then ended up rotting behind bars for tax evasion

Truly, a little knowledge can be a dangerous thing


Direct link Reply with quote
 
Rebekka Groß  Identity Verified
Local time: 03:24
English to German
Totally agree with Marijke Jun 9, 2010

Marijke Singer wrote:

Charlotte Boudon wrote:

Thanks a lot, Alex, that makes more sense now.

I'll try to do some more research about it.


Keep your own books and at the end of the year let an accountant do your tax returns. He/she will know exactly what you can claim and will usually save you money. His fees are also tax deductable. Wise investment.


Direct link Reply with quote
 

Alex Eames
Local time: 03:24
English to Polish
+ ...
I agree - use an accountant until you know the ropes Jun 9, 2010

Accountants are useful if you can find one that isn't too scared to push right up to the line, and yet still charges reasonable fees.

I agree Charlie that some things are "cut and dried" disallowable, and claiming for those would be foolish.

But there's an awful lot of grey area out there and that's where the "justify it and claim it" territory lies. The trouble is that a lot of accountants can't even agree amongst themselves what is allowable and what isn't (remember the recent EU VAT rules threads?).

For example, what percentage of your motor car use is reasonable? Well it depends how much of it you use for business purposes. I tracked mine for a couple of years and it worked out consistently ~30%. As long as you can support it with evidence, you can claim a proportion of you motor use.

Our accountant told us to claim for foreign language TV, all books and journals and magazine subscriptions of any kind etc. These are justifiable under keeping current.

A couple of years worth of accountant's fees can be well worth it, but after that you may be confident enough to do your own - depending on circumstances.

Alex Eames
http://www.translatortips.com
helping translators do better business


Direct link Reply with quote
 

Peter Linton  Identity Verified
Local time: 03:24
Member (2002)
Swedish to English
+ ...
My understanding Jun 9, 2010

A couple of years ago I went to a talk by an HMRC official about tax for translators. As other people have mentioned here, there were three vital principles:
-- You can charge for anything that enables you to run your business better
-- But it must be wholly and exclusively
-- You can claim training that updates your skills, but not for new skills.

So I would regard these as claimable:
Charlotte Boudon wrote:
• Renewing my ProZ subscription (or any other similar site)
• Upgrading to a newer version of Trados

Borderline: (is it wholly and exclusively?

• Buying any Windows-related software when owning a Mac

Capital expenditure, not a business expense:

• Having to buy a new computer

Within those boundaries, there are lots of things you can claim:
-- Dictionaries, essential software, newspapers etc
-- Share of household expenses ( heating, lighting, council tax (though some accountants do not)
-- Relevant training courses and conferences, including travel and subsistence here and abroad. They understand the need for language immersion. But combining a translation conference in the South of France with a holiday may raise queries.

One interesting aspect: for environmental reasons, you can charge something like 20p a mile when using a bicycle on business.

The third criterion above explains why you can charge for CPD, but not an MA. However, if you can prove that the MA was to update your knowledge rather than being new knowledge, you might be able to claim it. I did. A few years ago I did 2 Master's degrees in Translation one after the other and claimed for both. HMRC sent me a letter saying they would conduct an investigation. I was able to prove that many years ago I had worked as a translator and linguist, and the degrees were updates, not just new knowledge. This was accepted.


Direct link Reply with quote
 
Charlotte Boudon  Identity Verified
Local time: 03:24
English to French
TOPIC STARTER
Re: My understanding Jun 9, 2010

Thank you very much, Peter, I think I understand a lot better now.

Regarding the Windows-related software, since I own a Mac computer the only reason I own and use Windows is because of Trados. Surely, that falls under "anything that enables you to run your business better", yes?


Direct link Reply with quote
 

Alex Eames
Local time: 03:24
English to Polish
+ ...
Yes, without a doubt Jun 10, 2010

Charlotte Boudon wrote:

Thank you very much, Peter, I think I understand a lot better now.


Yes. Very good info Peter.

Charlotte Boudon wrote:

Regarding the Windows-related software, since I own a Mac computer the only reason I own and use Windows is because of Trados. Surely, that falls under "anything that enables you to run your business better", yes?


Yes. Absoluteley.

Alex Eames
http://www.translatortips.com
helping translators do better business

[Edited at 2010-06-10 07:18 GMT]


Direct link Reply with quote
 

Alex Eames
Local time: 03:24
English to Polish
+ ...
That's interesting - I wonder why? Jun 10, 2010

Peter Linton wrote:
-- You can claim training that updates your skills, but not for new skills.


That's a nice grey area, open to justification - as your MA example proves.

I wonder what the reasoning is behind not allowing tax deductions for training for acquiring new skills? Would it be that they don't want to foot the bill for a change of career direction or something else?

Alex Eames
http://www.translatortips.com
helping translators do better business


Direct link Reply with quote
 
Charlie Bavington  Identity Verified
Local time: 03:24
French to English
A pedant writes.... Jun 10, 2010

Alex & Malgorzata Eames wrote:

Charlotte Boudon wrote:

Regarding the Windows-related software, since I own a Mac computer the only reason I own and use Windows is because of Trados. Surely, that falls under "anything that enables you to run your business better", yes?


Yes. Absoluteley.


Indeedy. Do not forget the wholly and exclusively guideline, though. Work reasons may have been the sole and entire reason you now own Windows. To claim the cost in full, it must also be only used for business purposes subsequent to that decision.
If you use Windows for non-work related purposes, then strictly speaking, you should only claim for a proportion of it. The tax books are full of examples of plumbers buying vans because they need one for work, and then using it for non-business reasons, and suchlike.


Meanwhile, the more I think about it, while I understand the distinction in the MA/CPD situation, the less I agree with it. Even if a translator did decide to learn Lithuanian or specialise in Law or brain surgery, how is that essentially different from the investment allowances companies are allowed to use when they decide to diversify? OK, it is different because one is capital exenditure in tangibles and the other is intangible, I can see that, but nonetheless.... grrrr !!


Direct link Reply with quote
 


To report site rules violations or get help, contact a site moderator:


You can also contact site staff by submitting a support request »

Filling your Tax Return in the UK: Allowable business expenses?

Advanced search







memoQ translator pro
Kilgray's memoQ is the world's fastest developing integrated localization & translation environment rendering you more productive and efficient.

With our advanced file filters, unlimited language and advanced file support, memoQ translator pro has been designed for translators and reviewers who work on their own, with other translators or in team-based translation projects.

More info »
SDL MultiTerm 2017
Guarantee a unified, consistent and high-quality translation with terminology software by the industry leaders.

SDL MultiTerm 2017 allows translators to create one central location to store and manage multilingual terminology, and with SDL MultiTerm Extract 2017 you can automatically create term lists from your existing documentation to save time.

More info »



Forums
  • All of ProZ.com
  • Term search
  • Jobs
  • Forums
  • Multiple search