Income Tax

[chirpychippy]

This is my 2nd tax year since being SE I know my tax is going to be a bit of a shocker, so I am wondering! If I wonder off to my local tool toy shop and buy a festool toy for say £500 would this then be set against my tax thus reducing it by 500 smackers?

Please, thank you

 

[Belboz]

AFAIK HMRC allocate amounts dependant on trade/profession and these set out what you may be able to claim for tools and workwear.

Check out The HMRC guidance (albeit I bet it is less than you think!)

Alternatively wait for an answer from someone who is already claiming...

 

[cajar]

This is my 2nd tax year since being SE I know my tax is going to be a bit of a shocker, so I am wondering! If I wonder off to my local tool toy shop and buy a festool toy for say £500 would this then be set against my tax thus reducing it by 500 smackers?

Please, thank you

Not exactly. Your income as they see it, will reduce by £500 for tax purposes.

Tools have to be required for the current contract, 'nice to have's are not allowed to be deducted as expenses according to HMRC.

 

[alan333]

Everybody gets a tax free allowance of around £10k per year (depending on lots of things, but I'll keep it simple for my illustration).

So lets say you earn £25k, then you're due the first £10k tax free, but the other £15k is taxed at 20%. So you'd pay £3k in tax.

But if you had to buy £500 worth of festool for your job, then that £500 would be deducted from the total amount of income. So instead of earning £25k you actually earned £24.5k.

The £10k tax free amount doesn't change, but the amount over and above the £10k is now £14.5k. So that £14.5k is taxed at 20%. So you'd pay £2.9k in tax.

They don't see it that you were due £3k in tax but you bought a festool at £500 so your tax is now £2.5k.

They see it that you bought a festool for £500 so you save ONLY the tax on buying it, ie 20% of the £500 you spent.

 

[Dave54]

It's entirely up to you of course, but I'd recommend having a proper accountant do the job. I have for some years now. I keep the records of income and expenses, and take in all the receipts, invoices, bank statements etc. all organised ready for him. He checks everything, works out the tax, then does my tax return for me.
Not that expensive really, as with any other job get some prices. They know what they're doing, what can be claimed for, when and why. They should save you money and worry.

 

[chirpychippy]

Perfect sense thank you, Dave54 Ido have an account but he buggers ofaf on holiday on the 1st of April and comes back on the 19th, so I couldn't ask him.

Thank you for your help all and each

 

[noseall]

This is my 2nd tax year since being SE I know my tax is going to be a bit of a shocker, so I am wondering! If I wonder off to my local tool toy shop and buy a festool toy for say £500 would this then be set against my tax thus reducing it by 500 smackers?

Please, thank you

Yeah, that would mean the van I bought for and paid in full would effectively cancel out this years' tax!
No such luck.

 

[maltaron]

As Dave54 said, get an accountant. It's surprising what you can claim for. You work from home - claim for use of office, married? - claim wife's wages for secretarial work. Tools are normally charged at 20% a year for tax purposes and vehicles similar (could be different amounts now, I retired some years ago). A good accountant will know all the legal tax reductions available and most of them totally justify their fee.

 

[chirpychippy]

Thank you and thank you, I have got an accountant, he does it now for pocket money, he used to work for the IR, so, normally I would ask him, but he goes on holiday for three weeks at the beginning of April, probably to avoid people like me who hate paying tax.

I think the next financial year I am going to spend more time in Eire, cheers for your advice.

 

[KenGMac]

I was told that a Commercial Vehicle can be charged against tax at the full value of the Vehicle, not for the first year but for as long as you own it?

A non Commercial Vehicle can be offset but only at 10% of purchase cost, and a claim can also be made for the cost of any hire purchase payments, I have been told that this 10% can be charged year on year, plus all running costs, tyres, servicing, up-grade of Sat nav to ensure you are driving safely.

Cost of parking, cost of Road fund license

Bottom line is get an Accountant, one who has several other trades persons on hid books that way the Accountant will have all of the relevant information to mitigate as much tax as he can for you.

You need to have a meeting and if you have the time and are willing you could do a lot of the mundane Donkey Work and provide the Accountant with spread sheets of Parking, clothing, miles travelled [40p/Mile for first 25K miles, then down to 25p/mile] Etc.

Ken.

 

[maltaron]

I am confused as to why you are concerned about April. Unless you are a limited company your tax return for the year ending this April is due next January, so plenty of time for your accountant to sort out your accounts.

 

[Dave54]

I was told that a Commercial Vehicle can be charged against tax at the full value of the Vehicle, not for the first year but for as long as you own it?

A non Commercial Vehicle can be offset but only at 10% of purchase cost, and a claim can also be made for the cost of any hire purchase payments, I have been told that this 10% can be charged year on year, plus all running costs, tyres, servicing, up-grade of Sat nav to ensure you are driving safely.

Cost of parking, cost of Road fund license

Bottom line is get an Accountant, one who has several other trades persons on hid books that way the Accountant will have all of the relevant information to mitigate as much tax as he can for you.

You need to have a meeting and if you have the time and are willing you could do a lot of the mundane Donkey Work and provide the Accountant with spread sheets of Parking, clothing, miles travelled [40p/Mile for first 25K miles, then down to 25p/mile] Etc.

Ken.

I'm not an accountant, so check this for yourself.
I'd be careful what you are claiming for though, as claiming car expenses for mileage means you can't claim car tax, insurance, etc. etc.
https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-

The accountant should sort it out for you.

 

[Deleted member 174758]

miles travelled [40p/Mile for first 25K miles, then down to 25p/mile] Etc.

You're a bit out of date there, Ken, and your band limits are wrong, too. The allowance was 45p for first 10,000/25p mile over that from 2012, before that it was 40p and 25p. The higher rate band has been 10,000 miles for more than 20 years so far as I'm aware

 

[D_Hailsham]

This is my 2nd tax year since being SE I know my tax is going to be a bit of a shocker, so I am wondering! If I wonder off to my local tool toy shop and buy a festool toy for say £500 would this then be set against my tax thus reducing it by 500 smackers?

The Tax man will say that the £500 tool is a capital purchase as it is expected to last for more than one year. There are special rules covering how capital expenditure is treated for tax purposes.

Ask your tax office for advice.

Even if you are allowed to claim the whole £500 in one year, you will only save £100 (20% of £500).