Tax return blues - would a bit of solidarity help?

[Schmetterling]

Oh that's weird and quite a pitiful amount until I kick into working at home full time a la corona. . . . but then it's only £26 a month.
How do you judge your hours? Is it just up to you? I am not sure what is reasonable.
I am guessing I do about an hour a day when I don't have a specific job on, just emailing clients, scouting new work and keeping up to date, then about two hours (maybe more) where I am working, just doing extra script work and keeping up with the client.

How are the HMRC supposed to check all this, especially if I am doing it on a cash basis where the total amount is just lumped together and nothing more than a word document on my drive for my own records?

I am fully self-employed so for me it's five days a week and I have a dedicated office. Here is a screenshot of how I work out the percentages to claim. The SA return very much relies on honesty; they, as far as I know, rarely check; however, in case they do check one day I also have a sheet in the spreadsheet where I list the categories with all their payment dates (from downloaded bank statement) and amounts.

 

[ATOMIC SUPLEX]

I am fully self-employed so for me it's five days a week and I have a dedicated office. Here is a screenshot of how I work out the percentages to claim. The SA return very much relies on honesty; they, as far as I know, rarely check; however, in case they do check one day I also have a sheet in the spreadsheet where I list the categories with all their payment dates (from downloaded bank statement) and amounts.

View attachment 250261

Hummm, I think because I have almost paid my mortgage off I can't really do the rent thing, and even if I did I guess it would work out less than the simplified version. Maybe when I charge for 2020 - 2021 where I was only working from home it will make more sense.
They want the simplified version just to be in terms of hours.
I almost certainly do at least an hour a day when not with a client and at least two hours from home when I am (the rest is spent wherever the client is based) I assume I can just say thing rather than write out a detailed breakdown of hours worked from home every day? I have no idea of the exact times as I didn't know I could be claiming in this way. Do you thin that is acceptable or should I not make the work from home claim?

 

[Schmetterling]

Hummm, I think because I have almost paid my mortgage off I can't really do the rent thing, and even if I did I guess it would work out less than the simplified version. Maybe when I charge for 2020 - 2021 where I was only working from home it will make more sense.
They want the simplified version just to be in terms of hours.
I almost certainly do at least an hour a day when not with a client and at least two hours from home when I am (the rest is spent wherever the client is based) I assume I can just say thing rather than write out a detailed breakdown of hours worked from home every day? I have no idea of the exact times as I didn't know I could be claiming in this way. Do you thin that is acceptable or should I not make the work from home claim?

Just carry out the comparative calculations once and then you shall know forevermore which one is better for you.

So you are already working for a minimum of 15 hours per week, that’s almost half a working week.

I think that you absolutely should claim for your home expenses. I gladly pay tax - no laughing - but I also think that we should, or even must, claim for what we are entitled to claim for.

Here are a couple of links you might find helpful.

Small business money tips and advice | Money Donut

Get help on key small business money topics such as small business funding, tax and pensions

www.moneydonut.co.uk

Expenses if you're self-employed

Business expenses you can claim if you're self-employed

www.gov.uk

 

[ATOMIC SUPLEX]

So you are already working for a minimum of 15 hours per week, that’s almost half a working week.

I'm doing a minimum of 0 when I am on holiday. When not directly working on a contracted job I am only fishing for work and doing upkeep so only about an hour a day, so only 5 hours a week from home.

If I am working I do about an hours home prep in the am, and then maybe another hour or two in the evening reviewing the days work and getting ready for the next day. That's between 10 and 15 hours work at home a week. That's probably the max, unless there is something special to do, or I am creating graphics or music at home.

A normal working full working week for me is 40 - 50 hours away from home. sometimes its more, it's not often less.

 

[friendofdorothy]

You see it immediately at the end when you have filled it all out. If you do it well well well enough in advance you will get a letter and email detailing the amount you have to pay after the amount you have already paid on account has been deducted. Its too late for that now though, so you would have to do that sum yourself. You just have to know what your last payment on account was.

Thanks. I've already got my tax bill for this jan - curtesy of expensive accountant. I'm planning ahead for doing the next tax year.
All that payment on account stuff does my head in and I don't really understand it when an accountant explains it - well I get the gist - I just dont understand how they come up with the figures. They always seem to bear little relation to what I am earning/ hoping to earn.

 

[ATOMIC SUPLEX]

Thanks. I've already got my tax bill for this jan - curtesy of expensive accountant. I'm planning ahead for doing the next tax year.
All that payment on account stuff does my head in and I don't really understand it when an accountant explains it - well I get the gist - I just dont understand how they come up with the figures. They always seem to bear little relation to what I am earning/ hoping to earn.

Your payment on account (in advance) is just the amount you paid in tax again but spilt into two, one to be paid with your January payment and another in July. It's done so you are paying tax while you are earning (like page people) instead of a year later. As these are payments on account they will be deducted from your next tax bill amount. The idea is that it's assumed you will earn roughly the same every year.

My tax is pretty simple. I don't sell any products, have any stock, pay any staff etc etc. I just hire out my services and sometimes have to buy equipment to help me do that, or pay for travel somewhere to do that. It's quite straightforward money in and money out. It's not worth me paying anyone to do the HMRC form for me, as the hardest bit is keeping records and adding them up.

 

[Winot]

The idea is that it's assumed you will earn roughly the same every year.

And it’s worth pointing out that if you expect to earn less in the current year than you made last year then you can tell HMRC this and they will reduce the advance payment against future earnings.

 

[ATOMIC SUPLEX]

And it’s worth pointing out that if you expect to earn less in the current year than you made last year then you can tell HMRC this and they will reduce the advance payment against future earnings.

True, though I would only do that if the circumstances were extreme as it complicates things (slightly) and the HMRC balance any overpayment and give you the interest accrued.

 

[ATOMIC SUPLEX]

Just looking at claiming for travel between work and home.

HMRC says you can't claim for travel between work and home. But if my workplace changes on each contract and my self employed address is my home can I bung in a monthly train ticket? Pretty much every day (before working remotely) I would go to and work at my employers office during that contract. I may work out of two buildings but they are all usually walking distance from each other. I would also however do about an hour's administrative and days prep in my home office, and review and write up a day's work in my home office at the end of the day. I may also from time to time do various graphic and sound/music work for the client from home.

. . . So would it be legit to add monthly travelcards? I don't want to take the piss, but it's quite a large expenditure.

 

[ATOMIC SUPLEX]

Hummm, I 'think' I have done my taxes, but am worried it look suspicious for two reasons. Firstly, I have loads more expenses than I would normally out in for because of more train travel and buying a laptop, secondly the expenses exactly bring me to just under the 50,000 threshold. . . . I've never made that much, must have been a mega year.
Is this the sort of thing that triggers an audit? I mean, I guess I have all the receipts, but do I have to argue them? Would I have to somehow prove my working from home hours? I'm not sure how I could. . . And it's not like my clients kept track of my working hours at home or in the office. Probably just being paranoid.

 

[nick]

Just looking at claiming for travel between work and home.

HMRC says you can't claim for travel between work and home. But if my workplace changes on each contract and my self employed address is my home can I bung in a monthly train ticket? Pretty much every day (before working remotely) I would go to and work at my employers office during that contract. I may work out of two buildings but they are all usually walking distance from each other. I would also however do about an hour's administrative and days prep in my home office, and review and write up a day's work in my home office at the end of the day. I may also from time to time do various graphic and sound/music work for the client from home.

. . . So would it be legit to add monthly travelcards? I don't want to take the piss, but it's quite a large expenditure.

I'm not a tax accountant, but yes (strip out any personal use)

Assuming each of the places you contract at is for <2 years (there are also rules about popping back after a gap)t then your main place of work is your self employed address, so the travel to the employer client would be work travel

I'd give it 10 minutes to see if anyone more knowledgeable can pop along to contradict or confirm the above

 

[nick]

talking of wfh, you remind me that I have this as a reminder to incorporate on my next tax return:

Help yourself to some tax allowance:

Claim £6 per week
Claim tax relief for your job expenses


Can claim for the whole year in 20/21, even if you only wfh for one week - see here:
Martin Lewis: Working from home due to coronavirus, even for a day? Claim a year's worth of tax relief

Even if you are PAYE, there is an online form to complete to get your tax code adjusted.

If you do a return, then you can bring the relief into that

 

[ATOMIC SUPLEX]

I was just checking the HMRC website for details on claiming working from home and found this.

View attachment 250710

Am I going mad?
That's totally wrong right?

talking of wfh, you remind me that I have this as a reminder to incorporate on my next tax return:

Help yourself to some tax allowance:

Claim £6 per week
Claim tax relief for your job expenses


Can claim for the whole year in 20/21, even if you only wfh for one week - see here:
Martin Lewis: Working from home due to coronavirus, even for a day? Claim a year's worth of tax relief

Even if you are PAYE, there is an online form to complete to get your tax code adjusted.

If you do a return, then you can bring the relief into that

I think that is only for PAYE really isn't it? As you fill in your working from home hours on your normal return anyway.
It will be something I add to my taxes next year. Right?
My wife (PAYE) just applied.

Actually I remember now that I did already previously look at it just to see, and it came up with a message that I need to do it though self assessment.

 

[ATOMIC SUPLEX]

I'm not a tax accountant, but yes (strip out any personal use)

Assuming each of the places you contract at is for <2 years (there are also rules about popping back after a gap)t then your main place of work is your self employed address, so the travel to the employer client would be work travel

I'd give it 10 minutes to see if anyone more knowledgeable can pop along to contradict or confirm the above

OK, that's reassuring.
All my contracts are usually done within a couple of months tops.
I stupidly never really asked that question before, thought it was a bit of a grey area that I should stay clear of just in case, but those travel expenses are really rather a lot, especially when working down in Brighton.
The easy part is that I only use that travel for work. Same with my home office (separate building and computer etc).

 

[nick]

PAYE is just a way of collecting tax from employees at source (the buggers can't apparently be trusted to save up and pay in a lump sum)
The £6 per week I linked to is for employees asked to work from home. As self-employed (I think you said) you are (hopefully) claiming a whole lot more for all the home office expenses that you doubtless incur (wholly and exclusively) + travel etc (within approved rules blah blah).

Yep the online claim doesnt really work for self-employed, or Ltd Co contractors etc - just stick it on the tax return (it is designed for those like Mrs Suplex who may not usually do tax returns)

 

[nick]

oh - and re the gift aid talk further up thread - you know you can retrospectively do the gift aid declaration, or do it before you make the gift

It means the charity can get £125 for every £100 you give and, if you pay higher rate tax, you also get tax back through your tax return - as well as a warm and fuzzy feeling

Chapter 3: Gift Aid

www.gov.uk

3.6.4 Donors are able to give the charity a declaration:

• in advance of their donation
• at the time of their donation
• at any time after their donation subject to the normal time limit within which tax can be reclaimed

Find out more information on time limits for making a claim.

(the "normal time limit" is around 4 years)

Here is the gift aid guidance for individuals

Tax relief when you donate to a charity

Tax relief on donations, Gift Aid, payroll giving, leaving a gift in your will, keeping tax records; find a charity; donating land, property or shares

www.gov.uk

you can even shift the year in which you want to apply the gift aid, which may help if you are shifting tax bands due to fluctuating taxable income

 

[mx wcfc]

I expect it's probably me doing something wrong, but I'm just going round and round in circles.

I tell HMRC's website I want to do my tax return.
It tells me I need to sign in
I enter my email/password, then it sends a text.
I then run upstairs to the-room-that-has-phone-signal
Wait for the text, get the text, run downstairs, enter the code.
It asks what I want to do.
I tell it I want to do my tax return.
It tells me I need to sign in..........

I give up. Try tomorrow......

 

[nick]

next time you log on, click on the "remember me for 7 days box" ?

 

[ATOMIC SUPLEX]

oh - and re the gift aid talk further up thread - you know you can retrospectively do the gift aid declaration, or do it before you make the gift

It means the charity can get £125 for every £100 you give and, if you pay higher rate tax, you also get tax back through your tax return - as well as a warm and fuzzy feeling


(the "normal time limit" is around 4 years)

Here is the gift aid guidance for individuals

Tax relief when you donate to a charity

Tax relief on donations, Gift Aid, payroll giving, leaving a gift in your will, keeping tax records; find a charity; donating land, property or shares

www.gov.uk

you can even shift the year in which you want to apply the gift aid, which may help if you are shifting tax bands due to fluctuating taxable income

I found the gift aid thing an absolute ball ache when I looked at it previously. If I don't fill it in but claimed to be a gift aider when I donated, does that Rob the charity of some bucks?
I have mostly donated loads of furniture and clothes so I would have to contact the charities to see what my items actually sold for.

 

[prunus]

I found the gift aid thing an absolute ball ache when I looked at it previously. If I don't fill it in but claimed to be a gift aider when I donated, does that Rob the charity of some bucks?
I have mostly donated loads of furniture and clothes so I would have to contact the charities to see what my items actually sold for.

It makes no difference to the charity whether you put it on your tax return or not. And it makes no difference to you either unless you pay higher or additional tax rates. If you do you can be repaid the difference between your marginal rate and the base rate already donated to charity - which is 20% for higher and 25% for additional rate payers.

Eg: you donate £100 to a charity. They get £25 from HMRC (the basic rate you paid on the £125).

If you pay higher rate tax you put the £125 donation (ie the gross amount) on your tax return and will get a rebate of 20% (the difference between the 20% rate already claimed by the charity and the 40% tax rate you pay) of that, ie £25, deducted from your tax bill. If you pay additional rate (45%) you’d get 25% of the £125 back - ie £31.25.

If you’re a basic rate tax payer you don’t get any rebate - all the 20% you paid has already been given to the charity.

Source: I used to administer gift aid for a charity and had to explain this to people about 10,000 times. I hope I’ve got it right!

 

[nick]

yep - and to add the converse.
The charity can only claim the gift aid if you have "ticked the box" on a gift aid declaration to them. could be a tick on a sponsorship form or on a web site with a donation, or a bespoke bit of paper.
Doesn't need a signature , just name and address and a confirmation that you pay enough tax.

You are only "robbing" the charity of the extra 25% if you don't do the gift aid declaration (before, at the time of or within a few years after) of the donation .

 

[ATOMIC SUPLEX]

Deffo always registered for gift aid with my name and address.

 

[Leafster]

HMRC have announced this morning that they won't be charging a late filing penalty of £100 if you haven't managed to file your Tax Return by 31st January. Instead, Tax Returns will have to be filed by 28th February to avoid a penalty.

Any tax that would be payable is still due by 31st January so interest will start running from this date even if you haven't yet calculated the liabilities.

 

[lazythursday]

Oh I just feel like crying. I usually do this using an online accounting package and import all my bank transactions but ive been really slack and haven't actually imported anything for this financial year and now it turns out I can only go back 12 months so now I have to enter everything manually. And I have no idea whatsoever where any of my offline receipts might be.

And it is strangely upsetting going through bank statements from summer 19 and seeing all the transactions in cafes and bars and train journeys and trips to the Lakes. It is like some curious historical document from another era.

 

[Chilli.s]

A miserable experience thank fuck it's done. Next year is gonna be so easy. Basically a massive loss.

 

[ATOMIC SUPLEX]

A miserable experience thank fuck it's done. Next year is gonna be so easy. Basically a massive loss.

Yeah next year is pretty straight forward, no travel, all work is from home, straightforward home office purchases to get fully up and running. Only two jobs to add and the government self employed pay outs. Far far less earned so the payments on account from this year will be more than enough to pay for next years bill including the new payments on account. Hurrah.

 

[teuchter]

Something I only realised this year - assuming I've got it right.

If you're self employed and your expenses come to less than £1000 then you might as well just claim the "trading income allowance" of £1000 instead of working out and entering your "actual" expenses.
This is likely to be the case if you do the kind of work where your main expenses are work-from-home costs and insurance and stuff. If you're not purchasing expensive equipment in order to do your work.
Previously I'd been working out my expenses using those "simplified expenses" flat rates and so on, and entering these, but it wasn't really necessary.

The way you claim the allowance is a bit weird (unless I'm doing it wrong). You enter your turnover, and then you enter a number into the "trading income allowance" box. That gets subtracted from your turnover later in the form to produce your "net business profit for tax purposes". The number you enter into that box is, I assume, £1000. But why would you enter any other number in there? I don't see why it's not just a tick box that says "yes I want to claim the £1000 trading income allowance".

 

[wemakeyousoundb]

Something I only realised this year - assuming I've got it right.

If you're self employed and your expenses come to less than £1000 then you might as well just claim the "trading income allowance" of £1000 instead of working out and entering your "actual" expenses.
This is likely to be the case if you do the kind of work where your main expenses are work-from-home costs and insurance and stuff. If you're not purchasing expensive equipment in order to do your work.
Previously I'd been working out my expenses using those "simplified expenses" flat rates and so on, and entering these, but it wasn't really necessary.

The way you claim the allowance is a bit weird (unless I'm doing it wrong). You enter your turnover, and then you enter a number into the "trading income allowance" box. That gets subtracted from your turnover later in the form to produce your "net business profit for tax purposes". The number you enter into that box is, I assume, £1000. But why would you enter any other number in there? I don't see why it's not just a tick box that says "yes I want to claim the £1000 trading income allowance".

I think you got this wrong:
"If your annual gross income from these is £1,000 or less, you do not need to tell HMRC"
Not expenses.

 

[teuchter]

I think you got this wrong:
"If your annual gross income from these is £1,000 or less, you do not need to tell HMRC"
Not expenses.

If your total income is less than £1000 then it's covered under this allowance, that's right, and you don't pay any tax on it at all.

But if your total income is more than £1000 you can still use the allowance - you don't pay tax on the first £1000 of your total income.

 

[wemakeyousoundb]

If your total income is less than £1000 then it's covered under this allowance, that's right, and you don't pay any tax on it at all.

But if your total income is more than £1000 you can still use the allowance - you don't pay tax on the first £1000 of your total income.

is that on top of the tax threshold?
e2a: ha, I get it now