Self employed? 5 unusual tips to reduce your self assessment tax return bill

/ Posted By - Bradleys Accountants / Categories - Accounting for Individuals

Editor’s note: This post was originally published on 21 January 2014. It has now been completely revamped and updated for accuracy and comprehensiveness.

The deadline for filing your self-assessment tax return is looming. Accountants, financial advisors, money experts and regulating bodies such as the HMRC are urging taxpayers across the nation to fill in and return forms to HMRC by midnight on 31 January, along with payment for any tax they owe.

In this article, we look at five unusual ways that people can reduce their tax bill.

1. Money given to charity

The first one is pertinent not only to those making charitable donations but also to holders of annual membership to bodies such as the National Trust or who visit the zoo. Not many people realise that membership of bodies such as this counts as a charitable donation as does an entrance fee to most zoos! And while most people know that signing a Gift Aid declaration can boost your charitable donation by enabling the charity to reclaim the basic-rate tax, less known is that high-rate taxpayers can reclaim the rest of the tax they have paid on their donation by including details in the self-assessment tax return.

2. Heating bills

The second mentions the ability of self employed taxpayers and freelancers who work from home (even part time) to offset a part of their utility bills against their yearly tax bill. Whilst the more obvious heating and lighting bills are included, taxpayers can also offset their telephone and broadband costs. However, the amounts you can claim depend on how much of the costs are used for business purposes.

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    3. Rebate on work clothes

    A rebate on work clothes is entitled only to those workers who are required to wear a uniform to work. The definition of uniform is broad thought and therefore could include shop assistants who have to wear branded t-shirts at work for example. And if a taxpayer spend his/her own money to buy, clean, repair and replace it, they can claim tax relief on these costs too.

    4. Subscription costs claims

    The fourth tip refers to subscriptions to trade journals. For a self-employed taxpayer these could be legitimate business expenses and can be offset against their tax bills as long as they can be proved as wholly and exclusively for work purposes. These include subscriptions to tablet devices like Ipads and Kindle as well as a traditional newspaper, as long as a newspaper can be justified as a necessary business expense. The employed would also have to prove it is a necessary purchase to undertake their job.

    5. Travel expenses

    Lastly, self employed people can’t claim for regular travel between place of residence and place of work. But self-employed individuals who work from home can claim for journeys to visit clients, customers and suppliers. Additionally, car breakdown cover can be against the tax bill. However, keep proper records.

    Be careful about using information contained in this article as a substitute for professional advice. It’s best to speak to your accountant before taking any action.

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