Self Assement & Self Employed Tax Advice for Freelancers
Tax doesn’t have to be taxing – that is what they say in the adverts?
This post may be useful if you are just stepping into the world of self-employment and freelancing.
It is that time of year when last-minute calculations and the hunt for receipts become a preoccupation for some freelancers while others have managed their accounts throughout the year and are ready to go.
Whatever you do it is time for filing your accounts and doing the self-assessment forms. Make sure you file before 31st January to avoid fines and late filing charges.
I’ve titled this the self assessment & self employed tax advice for freelancers. I used to pay an accountant to do this for me, not any more. If you keep records throughout the year then carrying out a self assessment tax return is a synch.
So what do you need for your tax return?
- Records of your bank account and account details
- A P60 year-end from your employer (if you are employed as well as self-employed)
- If you have one for this year – P45
- Investment records
- Pension payment records
- Charity giving – payments via gift aid
- Year-end accounts of self-employment
Self Employed Accounts
So what can you charge to self-employed accounts? It’s often the question from people who are starting out.
Legitimate direct costs for running your business
These the direct costs associated with the daily pursuance of revenue in running your business. Therefore materials bought and used to supply your service. A good example could be an on air game purchase from the pay4prep website.
Use of Home as an office
If you use a part of your home as a voice over or radio studio and as office to prepare your programme you can charge a pro rata fee for this area for your business. This can include a pro rata share of gas, electricity and lighting.
Stationary & Postage
Simple postage costs, pens and paper you paid out to deliver your service.
Sundry and Misc
This can include memberships to organisations like The Radio Academy, subscriptions to show prep websites, newspapers and magazines. If they are used in creating the product you sell then they can be claimed as an expense of your business. A friend of mine once did regular cinema reviews, tickets were down as an expense of his business expenses.
If you’ve used your car have make sure you keep a record of your business mileage. The HMRC website has a rate page to tell you how much you can claim per mile.
This includes internet, land-line and mobile phone. Again this is either a pro rata cost or itemised bill for the use of the services.
Travel and Accommodation
A few years back I was involved in making a road trip website. The travel and accommodation for this work could be claimed as expenses of the business activity.
Motor Running Costs
Pro Rata proportion of your car costs including insurance, MOT, road tax, servicing and repairs.
If you’ve used a credit card or over draft that you have had to pay for you can put this and other bank charges against your accounts. Be aware that if you have earned interest on your accounts and savings you will need to declare this when you fill in your tax return. If you have ISA savings they are exempt.
If you have bought a piece of kit to help you deliver the service of your business it can be claimed as a legitimate Capital Allowance. Examples include new computers, microphones and even an office desk. Be aware though you should only buy what you need for the business, if it is for the personal use as well then you should only charge a proportion of the cost.
Filing in the Self-Assessment form
This is easy and HMRC provide advice and guidance along the way, simply visit their website to find out more at HMRC. Online filing takes place after October and you get up to the end of January to file. My advice is do it earlier if possible. Do not leave it up to the last minute. If you miss the deadline you get an automatic fine.
Also make sure you keep your online password and user number somewhere safe, there is nothing like loosing this and waiting up to 7 days for a new one!
I thought id’ round off with some content you could use in your shows… after all this is a show prep website.
All of the following received a mandatory £100 fine for late returns… So that’s £100 to create a good excuse.
- My pet goldfish died (self-employed builder)
- I had a run-in with a cow (Midlands farmer)
- After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman)
- My wife won’t give me my mail (self-employed trader)
- My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser)
- I’ve been far too busy touring the country with my one-man play (Coventry writer)
- My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
- I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man)
- Our business doesn’t really do anything (Kent financial services firm)
- I’ve been too busy submitting my clients’ tax returns (London accountant)
Hopefully the advice above is useful to you… and if you’re late on your return I hope your excuse will be better than those above.