Happy New Year!
As I step ball change into the New Year, I find myself contemplating whether it’s a season for wintering or renewal. In my conversations with others, I’ve encountered a spectrum of responses, and personally, I’m caught between the two. There’s a part of me buzzing with the excitement of a fresh year, brimming with possibilities and adventures. Simultaneously, another part of me craves the stillness and repose of hibernation. Can we, perhaps, embrace both?
Why not! Following an evening dedicated to taking stock, my reflections highlighted the importance of time spent with friends and family. This revelation is a departure from my usual introspections, which tend to be dominated by work achievements. While there were plenty of those last year, they seemed to pale in comparison to the significance of shared moments.
For the first time, possibly in my entire life, I find solace in this realisation. It’s not merely acceptable; it brings me joy. This marks a shift for me, and although the full implications remain unseen, I’m intrigued. As we venture into 2024, I’m committed to incorporating these lessons by penciling in dates with loved ones in my diary. Here’s to a year where both the thrill of new endeavours and the comfort of shared connections find their harmonious space.
Speaking of Connections
We had a wonderful evening this week for our annual Take Stock Workshop. Many of the women reflected on the importance of connections. Those moments with others were what stood out when looking back on 2023. The evening felt intimate and some even let go by burning what needed to die with 2023. Thank you to all who came- you were all so open and marvellous.
If you have not taken the time to reflect, we encourage you to do so. You can do our free online Take Stock Workshop here. Gather a couple of pals, carve out 3 hours, brew something hot or mix something cold and spend some time reflecting, sharing and being intentional. The shared experience is good for you. You won’t regret it!
It is also that time of year for… taxes!
“Nothing in life is certain except death, taxes and the second law of thermodynamics.”-Seth Lloyd
So, really what we want to know is; what business expenses are fair game? To guide you through claiming all your eligible self-employed expenses, we’ve crafted a definitive guide on what you can and can’t claim on your tax return.
But first, let’s establish Rule One: for an expense to be eligible, it must be incurred “wholly for business purposes.” If a cost has both business and personal aspects, you can only reclaim the business proportion as a percentage of the total cost.
Now, onto the good stuff. What can you claim?
Most folks opt for HMRC’s approved mileage rates, fixed at 45p up to 10,000 miles and 25p thereafter since 2012. This covers fuel, servicing, insurance, and more. However, it doesn’t include tolls, parking fees, or VAT on eligible costs.
What counts as a business journey? If driving is your job or if you’re traveling for business purposes. Commuting to work doesn’t count.
What records do you need? Keep a detailed mileage log, whether handwritten, computerised, or via mileage-tracking apps.
Example calculation: If you did 12,000 business miles in a tax year, you could reclaim £5,000.
Can you reclaim actual costs? Yes, but it’s advisable if you’ve never claimed using HMRC’s rates or if you change your car.
Using your home as an office
HMRC offers a Simplified Expenses Rate for using your home as an office, applicable if you work over 25 hours a month from home and are a sole trader. Limited Companies and LLPs can’t use this.
Example calculation: If you worked 35-45 hours a month for the first 6 months and 60-80 hours for the remaining 6 months, you could reclaim £168.
Pros and cons of the simplified rate? It’s less time-consuming but may result in a smaller reclaim. You can’t claim business phone and internet costs, which can be claimed separately.
Can you reclaim actual costs? Yes, but it’s more time-consuming and complex. Seek professional advice.
For work-related travel, you can reclaim expenses like public transport, airfares, parking, tolls, congestion charges, hotel rooms, meals on overnight trips, and car hire charges.
Thanks to our friends at Freeagent for the following information.
Can you claim expenses on a co-working space?
Yes, the money you spend on using a co-working space is tax deductible. I can highly recommend, especially Tribe Porty!
Being part of a coworking space means that you’re able to claim the cost of a co-working space back against tax you pay to HMRC.
The expenses you can claim for travelling to a co-working space will depend on:
- whether you take the space out as your main office or only occasionally
- for full-time co-working use, whether you’re a sole trader or a limited company
If you’re still deciding whether you’re going to use a co-working space occasionally or as your full-time office, pay close attention to the next two sections. They just might affect your decision!
Expenses if you only use a co-working space occasionally
If you use a co-working space occasionally and pay a daily rate every time you do so, you can claim this back as an expense under the category of “office costs”. What is deemed by HMRC as “occasionally” is interpreted from case law, but as a general rule of thumb, it’s when you don’t spend the majority of your working time in the co-working space.
One of the other benefits of occasionally working from a co-working space is that you could claim the cost of your travel to the space as an expense. Imagine a freelancer who works from home from the majority of the time but occasionally travels to London by train to meet clients and hot desks at a co-working space in between meetings. Because they only use the co-working space occasionally, the freelancer would be able to claim expenses for the cost of these train journeys, as well as for the time they spend in the co-working space.
Expenses if you use a co-working space as your full-time office
If you’re a sole trader, you can still claim expenses for the costs of a co-working space under the category of “office costs” if you use the space as your full-time office. However, if you’re working there on a regular and predictable basis, you can’t claim back the travel costs.
If you’re a limited company director, you or your employees can sometimes claim expenses for travel to a co-working space. This depends on whether the co-working space is classed as your permanent workplace or not.
The criteria for this is whether the company directors and employees in question expect to be at the space for two years and spend at least 40% of their time there. If neither of these conditions are satisfied, then this travel would be considered “ordinary commuting” and would not be eligible for tax relief.
Armed with the knowledge you need about the financial implications of using a co-working space, you should now be in a good position to decide whether it’s the right option for you.
Day-to-day business running costs
This extensive list includes expenses like goods for sale, tools of your trade, work-related clothing, memberships, business phone, internet use, web costs, software subscriptions, marketing, advertising, insurance, employee costs, office equipment, stationery, and more.
Now, let’s clarify what you CAN’T CLAIM
Commuting: Travel to and from work is not eligible for tax relief.
Entertaining: Costs related to entertaining clients, suppliers, or customers, including meals and event tickets, are not tax-deductible.
Other ineligible expenses: Everyday clothing, childcare and school fees, fines, gym fees (unless essential for your job), golf club memberships, and political party memberships.
Professional advice: Seek guidance on legal costs for property and machinery purchases and handling charitable donations.
Navigating the landscape of self-assessment can be challenging, but with a clear understanding of eligible expenses, you can make informed decisions and ensure you’re not leaving money on the table. If in doubt, always consult with a professional for personalised advice tailored to your unique situation.
Good luck and don’t procrastinate!