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UK translators: what expenses do you deduct from your taxable income?
Thread poster: Tom in London

Tom in London
United Kingdom
Local time: 16:27
Member (2008)
Italian to English
Aug 15, 2011

I find there's hardly anything I can deduct. Paper, printer ink, computers and software (but as capital expenditure), not much else. So I end up paying maximum taxes. What expenses do YOU deduct from your income?

[Edited at 2011-08-15 08:49 GMT]


 

Mary Worby  Identity Verified
United Kingdom
Local time: 16:27
Member
German to English
+ ...
Utilities Aug 15, 2011

You can deduct a proportion of your utilities bill for heating your 'office'. Phone bills, internet, etc. obviously. Postage if you send things to clients. You can claim petrol if you are going out to purchase any supplies or your trip is otherwise work-related. Childcare, if applicable.

But working as a translator is a fairly low-overheads business. Which, although there's not much to claim, also means there are few expenses!


 

Emma Grubb  Identity Verified
United Kingdom
Local time: 16:27
Member (2010)
German to English
+ ...
Regarding childcare Aug 15, 2011

Mary Worby wrote:

Childcare, if applicable.



I am currently expecting my first child and have therefore been looking into childcare options. From what I've read, childcare expenses are not tax-deductible in the UK, but I'd be very pleased if anyone could point out information to the contrary!

I think the only way to save on childcare as a self-employed person is to make an application through the Tax Credits system. But this is a means-tested benefit and depends on your household income as a whole (i.e. including that of your husband/wife).


 

Roberto Bertuol  Identity Verified
United Kingdom
Local time: 16:27
Member (2007)
Italian to English
+ ...
Expenses you can deduct Aug 15, 2011

You can also deduct other expenses, such as subsriptions to professional publications (related to your business), memberships to professional associations (such as IOL, ITI, ATA, etc.), courses you attend (related to your business), professional insurance, accountancy or legal costs and, in case you subcontract work, the amount you pay to your suppliers. However, as Mary said, the overall amount of expenses a translator can claim is not really high considering the low overhead...
Roberto<
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You can also deduct other expenses, such as subsriptions to professional publications (related to your business), memberships to professional associations (such as IOL, ITI, ATA, etc.), courses you attend (related to your business), professional insurance, accountancy or legal costs and, in case you subcontract work, the amount you pay to your suppliers. However, as Mary said, the overall amount of expenses a translator can claim is not really high considering the low overhead...
Roberto

robertobertuol.com
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Sonia Hill
United Kingdom
Local time: 16:27
Italian to English
Childcare? Aug 15, 2011

Mary Worby wrote:

You can deduct a proportion of your utilities bill for heating your 'office'. Phone bills, internet, etc. obviously. Postage if you send things to clients. You can claim petrol if you are going out to purchase any supplies or your trip is otherwise work-related. Childcare, if applicable.

But working as a translator is a fairly low-overheads business. Which, although there's not much to claim, also means there are few expenses!


Can you really deduct childcare Mary? My accountant told me I couldn't. I have to pay huge nursery and childminder bills each month for two children under school age, so being able to deduct them would be wonderful.

Aside from that, I deduct a proportion of our utility bills and mortgage interest because I work from home. It's a minimal amount, but it all adds up. Then phone bills, Internet, postage, dictionaries, hardware, software, paper, ink, accountancy, etc. My expenses are fairly low overall.

[Edited at 2011-08-15 10:11 GMT]


 

kmtext
United Kingdom
Local time: 16:27
English
+ ...
My accountant Aug 15, 2011

He lets me know what I can and can't deduct, and his fees are tax-deductable too.

I decided, after four years of working from home that it was much simpler to rent a small office. That way, I have one set of business expenses and don't have to go through calculations of percentages of rent, electricity, phone and heating bills as well as the amount I spent on tea, coffee and toilet rolls for use while working.


 

Peter Linton  Identity Verified
Local time: 16:27
Swedish to English
+ ...
Two rules Aug 15, 2011

As I understand it, there are two key rules:
1. You can charge any expenses that enable you to run your business better
2. The expenses must be wholly and exclusively for business purposes.

Household expenses:
All the expenses of running a home office. All domestic expenses (including council tax) divided by the number of rooms in the house (assuming one room is used as your office).

Vehicles:
If you use your own vehicle for business purposes, yo
... See more
As I understand it, there are two key rules:
1. You can charge any expenses that enable you to run your business better
2. The expenses must be wholly and exclusively for business purposes.

Household expenses:
All the expenses of running a home office. All domestic expenses (including council tax) divided by the number of rooms in the house (assuming one room is used as your office).

Vehicles:
If you use your own vehicle for business purposes, you can charge a mileage rate (was 40p per mile). Lower rates for motorbikes and bicycles (yes, bicycles because they fit into the government's and environmental strategy). I once asked a man from HMRC if I could claim for driving by car to a translators' conference in another country. The answer was yes.

Language immersion:
HMRC understand the need to refresh your linguistic knowledge by travelling abroad. This is where rule 2 comes in – you may need to be able to prove that you went abroad on business, not on holiday (eg to visit friends or relatives). A translators' conference abroad provides a very good basis for claiming expenses – travel, subsistence etc.

Books, dictionaries. subscriptions, computer software needed for translating, cost of language courses, etc.
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Mary Worby  Identity Verified
United Kingdom
Local time: 16:27
Member
German to English
+ ...
Childcare Aug 15, 2011

I'm pretty sure that you can deduct childcare up to a specific limit per month (about £400, from memory). But obviously I'm not a qualified accountant. It has to be a registered childcare source (i.e. not Auntie Mabel's fifteen year-old neighbour).

I'm a limited company, though, if that makes a difference. The rules for sole traders may be different! I may be getting confused between what we can run through the company and what is tax-deductible! But the childcare is definitely pa
... See more
I'm pretty sure that you can deduct childcare up to a specific limit per month (about £400, from memory). But obviously I'm not a qualified accountant. It has to be a registered childcare source (i.e. not Auntie Mabel's fifteen year-old neighbour).

I'm a limited company, though, if that makes a difference. The rules for sole traders may be different! I may be getting confused between what we can run through the company and what is tax-deductible! But the childcare is definitely paid for by the company and this is endorsed by our accountant.
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Richard Foulkes (X)  Identity Verified
United Kingdom
Local time: 16:27
German to English
+ ...
Home office Aug 15, 2011

I've never gone down the road of claiming for the use of a room in the house since you'll then probably be liable for capital gains tax on that room if you sell your house.

I do rent a serviced office though so I claim for that.


 

Jennifer Forbes  Identity Verified
Local time: 16:27
Member (2006)
French to English
+ ...
Only if ... Aug 15, 2011

Richard Foulkes wrote:

I've never gone down the road of claiming for the use of a room in the house since you'll then probably be liable for capital gains tax on that room if you sell your house.

I do rent a serviced office though so I claim for that.


I believe I'm right in saying that you could only be made liable for capital gains tax on the sale of your house (assuming you sell it at a profit) if the room you use as an office is used *exclusively* for that purpose and no other. As long as your office also houses other things - in my case all my books and a wardrobe - I think you can safely claim the cost of running that proportion of your home as an office.
Perhaps Prozians who are knowledgeable on this point could confirm?
Jenny


 

Richard Foulkes (X)  Identity Verified
United Kingdom
Local time: 16:27
German to English
+ ...
See Peter's point 2... Aug 15, 2011

Jenny Forbes wrote:

Richard Foulkes wrote:

I've never gone down the road of claiming for the use of a room in the house since you'll then probably be liable for capital gains tax on that room if you sell your house.

I do rent a serviced office though so I claim for that.


I believe I'm right in saying that you could only be made liable for capital gains tax on the sale of your house (assuming you sell it at a profit) if the room you use as an office is used *exclusively* for that purpose and no other. As long as your office also houses other things - in my case all my books and a wardrobe - I think you can safely claim the cost of running that proportion of your home as an office.
Perhaps Prozians who are knowledgeable on this point could confirm?
Jenny


In that case, I'd have though point 2 of Peter's post would apply in respect of your expenses. I don't think the taxman likes you to have your cake and eat it. I'll bow to superior knowledge though...


 

Clive Phillips  Identity Verified
United Kingdom
Local time: 16:27
Member (2009)
German to English
+ ...
Home office Aug 15, 2011

A couple of further deductible expenses not (I think) already mentioned:
Proportion of mortgage interest. Proz.com membership fee.

Jenny, I think you're right about CGT exemption.

But yes, it doesn't all amount to a great deal, so the Government probably welcomes with open arms all new entrants to the freelance translation profession.


 

Sonia Hill
United Kingdom
Local time: 16:27
Italian to English
Thanks Mary Aug 15, 2011

Mary Worby wrote:

I'm pretty sure that you can deduct childcare up to a specific limit per month (about £400, from memory). But obviously I'm not a qualified accountant. It has to be a registered childcare source (i.e. not Auntie Mabel's fifteen year-old neighbour).

I'm a limited company, though, if that makes a difference. The rules for sole traders may be different! I may be getting confused between what we can run through the company and what is tax-deductible! But the childcare is definitely paid for by the company and this is endorsed by our accountant.


I'll get my accountant to look into this. My husband has a limited company, so if I can't claim for it then it looks like he should be able to


 

Maika Vicente Navarro  Identity Verified
Australia
Local time: 01:27
Member (2005)
English to Spanish
+ ...
All business related expenses Aug 15, 2011

There are a number of expenses that you can include as freelance translator when doing your tax return. If you work from home, as many of us do, you can deduct utility bills such as electricity, Internet or gas. You can also include part of your mortgage or rent expenses, but it depends on many factors. Part of your council tax, for example is also a good idea.

If you are paying National Class 2, if I am not mistaken, you can deduct it from your revenue, since class 2 is voluntary.
... See more
There are a number of expenses that you can include as freelance translator when doing your tax return. If you work from home, as many of us do, you can deduct utility bills such as electricity, Internet or gas. You can also include part of your mortgage or rent expenses, but it depends on many factors. Part of your council tax, for example is also a good idea.

If you are paying National Class 2, if I am not mistaken, you can deduct it from your revenue, since class 2 is voluntary. I believe that you can deduct any voluntary payment you do to HMRC to increase your retirement pensions.

Other deductions can include bank fees incurred when being paid by the client, bank fees to open/maintain a particular bank account for your business.

Any professional memberships such as ATA, Proz, etc. Any expenses to promote your business, such as creating an Adsense campaign. If you need a printer or a new computer, that can be deducted also. You can even deduct your computer, if it is fairly new, its a capital loss that you can calculate.

Any course you might take to improve your skills as translator, bookkeeper, marketeer, etc.
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philgoddard
United States
Member (2009)
German to English
+ ...
I think we should be grateful that we have such low overheads. Aug 15, 2011

There can't be many businesses where virtually everything you earn goes into your pocket. I rarely have more than a couple of thousand pounds a year in deductable expenses, but unless you're paying 100% tax, the bigger your profits, the better!

By the way, Maika, you can't deduct council tax.


 
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