How to claim tax relief

Calculator and accounting work


If you are one of the thousands of self-employed mums currently trading in the UK, then you need to be aware of the tax reliefs you are entitled to claim.

If you are self-employed then you can claim expenses against your tax bill. Thousands of pounds are sitting in HMRC’s coffers waiting to be reimbursed to the growing number of mothers who find self-employment the best way combine their parental responsibilities with financial necessity.

Whether you are freelancer, an online trader or making your own products from home, you could be missing out on money if you don’t find out how the tax regulations apply to you.

HMRC cannot automatically refund your money; you need to help them by submitting an official claim.

‘Allowable’ costs for self-employed mums
According to HMRC, an ‘allowable expense’ is a cost you pay “with the sole purpose of earning a business profit”. That seems to imply a very broad range of items, but there are a host of regulations that govern the specifics. It is also very clear that any personal, non-business related things are definitely not included. For example, improving or buying fixed assets or things that are covered by an insurance policy.

Usually, if you have bought something solely for your business then you can deduct its full cost from your taxable profits and get tax relief for the full amount.

This includes:
– Professional fees, such as lawyers or accountants.
– Cost of raw materials or the goods you buy to resell.
– The running costs of a car or van; including tax, servicing, repairs and insurance. If this is also your family car then this expense is worked out as the proportion of journeys you make that are entirely business related.
– Travel costs for business journeys.
– Overdraft, bank and credit card charges.
– Advertising
– Business specific insurance policy.
– Phone and internet usage.
– Home office costs including: desk, computer, stationery, postage and other essential equipment.
– Subscriptions to professional journals and organisations.
– Fixed household costs if you are self-employed and work from home. This includes: water rates, gas and electric for heating and lighting, council tax, mortgage interest and rent. You get tax relief on the proportion of these expenses that are attributable to your business. So, for example, if you have four rooms in your home and one of them is your office, then a quarter of these bills would be allowable for tax relief.

How many of those elements of self-employment apply to your situation? And this is not an exhaustive list!

HMRC considers that you are ‘trading’ as a self-employed taxpayer if you fall into one of these categories:
– You sell goods through a franchise, like Avon, and are paid by commission.
– You provide your services as freelancer, like a tutor or writer, and agree a fixed price per job with each client.
– You use trading and auction websites, like eBay to buy and sell goods online.
– You regularly sell items through classified advertisements or at car boot sales.
– You sell items you have made yourself, like occasion cakes or jewellery, for a profit.

As part of a business partnership or as a sole trader, you benefit from the freedom of and shoulder the ultimate responsibility for your self-employed business. You pay your tax bill, so you should also claim your tax relief entitlement.

Many self-employed mums prefer to seek professional help when submitting a claim to ensure its accuracy and that they don’t miss out on any of the more obscure reliefs applicable to their particular working situation.

Paul Donohoe is Managing Director of Tax Rebate Services. Click here to claim your working from home tax relief or call 01228 520477 to speak to the experts at Tax Rebate Services.

Comments [2]

  • Richard says:

    I have an old BIock benefit in kind taxed and pending to pay. however need the expert to check if there is a way to reduce this old amount based the tax year result.

    • Mandy Garner says:

      Hi Richard,
      You would need to supply more information. What kind of benefit? What is your tax situation – employed/contractor, etc? Is there any written policy on this benefit?

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