Common Tax Write-Offs for Freelance Workers
Freelance workers in the United Kingdom have many tax responsibilities. Most freelance workers must register as self-employed with HM Revenue & Customs and complete Self Assessment in order to inform them of income and capital gains as well as claim deductions or relief against a tax bill. There are some common deductions that freelance workers can take in order to lower their ultimate tax bills, and these deductions are often called tax write offs.
Common Tax Write Offs: Running CostsThe running costs of a freelance business can often be claimed as deductions against a tax bill. Running costs often include the goods bought in order to sell, any wages paid to employees, any rent or overhead related to a business office or premises, the cost of office equipment and stationery and the cost of running any business-related vehicles.
Equipment for home offices such as computers, printers, telephones, fax machines, photocopiers and voice recorders can often be counted as tax write offs as well. The cost of hosting and running websites may also be able to be counted as tax deductions.
Common Tax Write Offs: EquipmentSome freelancers can not complete their work without specific equipment. Freelance businesses that require large equipment, such as printing presses for graphic designers or developing equipment for photographers, may also be able to count the care and repair of this equipment towards tax deductions. However, if maintenance and repair of the equipment was included in the purchase price, and the purchase price was already counted as a deduction, then these costs may not be able to be claimed as tax write offs.
Common Tax Write Offs: Business TravelExpenses related to business travel may be able to be counted towards tax deductions if they are properly evidenced by receipts. These expenses may include transportation costs, hotel costs and even some modest meal costs as long as receipts are kept for all of them. However, some meal costs may not be able to be counted towards deductions because they could be considered entertainment expenses rather than travel related expenses. Also, business travel costs can only be counted as tax write offs if the sole purpose of the trip is business. If there is any person component to a trip then usually no expenses from that trip can be counted as business travel expenses.
Making Sense of Common Tax Write OffsMaking sense of Self Assessment, tax bills and tax write offs can be very difficult. The specific rules and instances in which deductions may or may not be taken are complex. Many freelancers find that keeping strict records and receipts, and turning them over to a professional accountant, is more efficient than trying to complete Self Assessment on their own. Doing so often leaves freelancers plenty of time for their own work and allows them to remain confident that they will properly meet all of their tax responsibilities.
There are some common tax write offs that most freelance workers can claim. The running costs of a business, equipment related costs and business travel costs can all commonly be claimed as tax deductions for freelancers. However, making sense of tax write offs can be hard and many freelancers will find that turning their records over to professional accountants is more efficient then working through them on their own.