zonino Posted July 6, 2007 Share Posted July 6, 2007 Rowan: its only 40p per mile for the first 10,000, then it drops down to 25p per mile. W/robe: it is perfectly acceptable to include the expenses on your invoice to the company, or provide the receipts to the company and claim it separately, however the invoice would normally be laid out: Services: £XXXTravel: £XXXother Expenses: £XXXTotal Due: £XXX If you hire the lanterns personally and then hire them on to the event company (so the hire appears on your invoice), even if you charge them exactly what you paid for them you will pay tax on your hire to the event company and claim it back against your hire from White Light. I think we need to be tax-specific here, in this case WL would charge you for VAT, if You ARE registered for VAT: you would charge the event company for the NET amount from WL, and VAT on the whole of your invoice, and claim back the VAT from the WL invoice if you are NOT registered for VAT: you would charge the event company your services and the full amount (including VAT) of the invoice from WL. Essentially, just because it is not part of your services fee, doesn't mean you can't present it on your invoice as an additional charge Link to comment Share on other sites More sharing options...
gareth Posted July 6, 2007 Share Posted July 6, 2007 My accountant's advice is the same as Rowan's ... keep a note of the mileage of all business-related trips, then at the end of the year present the total business mileage as a proportion of the total mileage covered for the year. If you're doing as I did, and operate as an 'employee' of your own limited company, you can then pay yourself under the 'fixed profit car scheme' (I think that's what it's called ...), at 40p/mile for the first 10k miles, and 25p/mile subsequently. Link to comment Share on other sites More sharing options...
w/robe Posted July 6, 2007 Share Posted July 6, 2007 it is perfectly acceptable to include the expenses on your invoice to the company, or provide the receipts to the company and claim it separately,But you can not do one and behave as if you are doing the other.Essentially, just because it is not part of your services fee, doesn't mean you can't present it on your invoice as an additional chargeI was specifically advised by my accountant to avoid doing this, and I still had an incident where the BBC were telling the tax man that I had been paid the costume budget for a show which I had then chosen to spend at the BBC costume hire department. Link to comment Share on other sites More sharing options...
Bix Posted July 9, 2007 Share Posted July 9, 2007 I have been VAT registered for 3 years now I think, and have always kept exact mileage logs of every job to show genuine proportions of private/work use and also claim appropriate 40p/mile back and apportion my VAT on fuel. As regards travel to work sites, I regard myself as a consultant in the employ of my limited company and if the director (myself) asks me to travel to a warehouse a few days on the trot for prep days then I will claim back that mileage. My accountant costs me nigh on 1k a year but saves me more than that in tax, legitimately so good value. And always at the end of the phone for advice which is equally as handy! I refused the £120 inspection insurance but wont be next year! To sum up, get an accountant. They cost money but they can make some sense of the minefield of regulations. Link to comment Share on other sites More sharing options...
Guest lightnix Posted July 9, 2007 Share Posted July 9, 2007 Any money paid to you by a client in respect of work done for them, is classed as "income" for tax purposes and should be declared. This includes travel allowances and PDs. Link to comment Share on other sites More sharing options...
alex_kyuss Posted July 12, 2007 Share Posted July 12, 2007 Hi all.After reading this I feel I might be doing something wrong because when I work for company A, they say we will pay you £100 for X job so I invoice them for X job at £100. Then I take my invoice for £100 + recites for say £15 worth of meals fuel etc and the way I work it out I got £100 - 15 therefore I'm taxed on £85 being freelance I have to pay for my own meals, fuel etc and take them out of the money I get paid for the job. I am right / wrong I am being screwed.Cheers Alex Link to comment Share on other sites More sharing options...
zonino Posted July 12, 2007 Share Posted July 12, 2007 ok, as I read the above you are being contracted at a rate of £100 for the job. the company is NOT paying any of your expenses. you INVOICE the company for £100 in your accounts you show REVENUE of £100expenses of £15 (say £10 fuel, £5 food) total PROFIT/LOSS: £85 yes, you will be taxed on the £85, NOT the £100 of course, being able to claim meals as expenses depends on a few things such as the length of time you'll be working etc it seems to me you're confusing revenue with profit Link to comment Share on other sites More sharing options...
w/robe Posted July 12, 2007 Share Posted July 12, 2007 Strange that this should happen while this thread is live. I did a job 6 weeks ago, they have paid my invoice but they owe me about £180 that I spent on the costumes above the petty cash that they gave me (this was still under budget). I sent them all the receipts but today when I tried to chase up the money again they asked me to invoice them for the ammount and where surprised when I said that I could only actually invoice, as opposed to request petty cash, if they return £180 worth of receipts to me otherwise I will end up paying tax on it. Link to comment Share on other sites More sharing options...
paulears Posted July 12, 2007 Share Posted July 12, 2007 Expenses are normally revenue neutral (says the accountant) as you don't make a profit on them. So you will have the expenses in your income account, AND the expenditure account - neatly cancelling each other out. If you do make money on the expenses, by inflating them, and there's nothing wrong with that, then the difference between them is still profit, and gets taxed as such. Dealing with these kind of things is tricky, hence the money we pay to accountants being well spent- but expensive. I have one regular client who cannot cope with self-employed people, and he deducts tax from me, which at the end of the year is factored into the accounts, and what I've reluctantly paid off-set against the tax I owe. He tells me that I really should include the tex deducted as an expense, that later on I show as income - this I cannot understand at all! He also said not to worry about it, and simply to enter it on the invoice as a minus figure - so Invoice line 1 at £1000. Line 2 states "less income tax paid" £220, invoice total being £780! So I do a grands worth of work, for £780, and this makes the book correct???? Link to comment Share on other sites More sharing options...
zonino Posted July 12, 2007 Share Posted July 12, 2007 something intrinsically wrong there Paul! does he not receive any other invoices? stationary etc? tell him that he should be processing it in EXACTLY the same way! (well, it should be coded for technical services rather than stationary...) Link to comment Share on other sites More sharing options...
Ian Cunningham Posted July 12, 2007 Share Posted July 12, 2007 I have one regular client who cannot cope with self-employed people, and he deducts tax from me, which at the end of the year is factored into the accounts, and what I've reluctantly paid off-set against the tax I owe. He tells me that I really should include the tex deducted as an expense, that later on I show as income - this I cannot understand at all! He also said not to worry about it, and simply to enter it on the invoice as a minus figure - so Invoice line 1 at £1000. Line 2 states "less income tax paid" £220, invoice total being £780! So I do a grands worth of work, for £780, and this makes the book correct???? That's completely screwy :) - As I understand it you are either an employee (temporary/casual) or a freelancer (strictly speaking a contractor). If they are taking tax off at source then they are treating you as an employee for tax purposes and should taxing you under PAYE and paying the appropriate Employers NI. You should NOT be supplying an *invoice* in these circumstances rather a note of days/hours worked or a formal timesheet. You should then receive payslips with details of pay, & tax deducted and also a P60 at the tax year end.(you then simply fill in an "Employment" page on your tax return with the details from the P60 and it should all come out in the wash) If he's asking you to invoice for work done then he is treating you as a contractor and should not be taking tax off at source, period. His accountant must love him!! To be honest the way many freelancers are booked by companies and the way they work for them puts them right in the grey area between self-employed and employee - I can see more companies moving over to treating freelancers as "temporary employees for tax purposes" in the future.I think I'll be up to 4 separate "Employment" pages on my next tax return which confuses the hell out of HMRC (which is ironic as it's caused by their own rules!) :) Ian Link to comment Share on other sites More sharing options...
zonino Posted July 13, 2007 Share Posted July 13, 2007 I can see more companies moving over to treating freelancers as "temporary employees for tax purposes" in the future.Or, alternatively, they will insist that freelancers are a limit company - I know of a company in the financial sector who will only pay to a Ltd company - fine if I have my own, otherwise I have to use an umbrella company the employment pages shouldn't cause any confusion to HMRC to be honest... Oh, and Paul, that could very well be the reason for your "random" inspection Link to comment Share on other sites More sharing options...
Guest lightnix Posted July 14, 2007 Share Posted July 14, 2007 I can see more companies moving over to treating freelancers as "temporary employees for tax purposes" in the future.Or, alternatively, they will insist that freelancers are a limit company...It is highly unlikely that hire / prod cos will take on freelancers as temporary employess, unless forced to do so by the tax man. This is because doing so would mean that they have to pay Employer's NI on top of your rate, along with Holiday Pay (as well as providing all your PPE, training etc.). Some companies have suggested that they would subtract these amounts from the rates they pay to their crews, were they forced to go the PAYE route. I've already extensively posted my views on freelancers becoming one-person Ltd Co's. I'll spare you all the full version again, but basically a Ltd. Co. can be a very effective way for people like LDs and operators with their own desk for hire, to trade. However, it could be a risky move for the "Technician With A Toolkit", as there may be IR35 implications (similar to IR56, but with the freelancer taking the tax liability if the regs are breached. ...Oh, and Paul, that could very well be the reason for your "random" inspectionMany (if not most) self-employed people get a random "Aspect Enquiry" at some point in their careers. I had one a couple of years ago (into my travel expenses) and it cost me almost as much in accountants fees as it would have done in extra tax (about £200), but we saw them off and that's the main thing :( Link to comment Share on other sites More sharing options...
Crewtart Posted July 25, 2007 Author Share Posted July 25, 2007 Another point not made yet is that you can claim expenses against tax even if you have not charged them as income. For example you might buy tools that are part of your job and can offset that cost against your tax. Or if you are working away from home and buy meals you can claim the tax back on the real cost of the meal rather than the amount of expenses you get. So keep all the receipts you can - parking, train fares, meals, tools and materials, PPE, anything that might be part of your job. Every £10 worth of receipts is like £2 or so to you at the end of the year. Sorry, been away working. Yeh, I keep everything related to the business. I just couldn't get my head around the expenses thing, that being why should I pay tax on travel expenses reimbursed to me by the employer. So, do I separate them out and bundle them with my other travel outgoings, eg, train, car? Link to comment Share on other sites More sharing options...
David Lee Posted July 25, 2007 Share Posted July 25, 2007 How does your client (not employer) reimburse your expenses? Is it part of your invoice? If so, as long as you have receipts, you will deduct it as normal travel expenses when you do your tax return, therefore it will not be part of your taxable income. Remember, if you are self employed, you are just invoicing for the job as a whole- your expenses are wrapped up in all that as part of your quote. The fact that the client is reimbursing you for your travel shouldn't make any difference as that should have been factored in to your quote. (Hope that makes sense). :) Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.