Self Employed Expenses -True or Myth

[JamieAllen]

I've been told by an accountant that the following expenses are tax deductible for the self employed:

• Decorating of home-office (in proportion to business use)
• Road tax is a business expense but not tax deductible
• Providing a coffee to a customer at a meeting cannot be claimed as it's 'entertaining'
• Teenager childrens can be employed within the business (admin) etc on a part-time basis up to the personal allowance

Another accountant told me something totally different! The joys of choosing an accountant. Would be grateful for others views.

Thanks.

Jamie

 

[Maslins]

Decorating of home-office (in proportion to business use)

Allowable...though if you're taking the mickey, eg buying a 4 bedroom house and each month changing which room is your office to decorate it, HMRC would take a very dim view.

Road tax is a business expense but not tax deductible

This isn't true...the accountant may have meant if you're claiming the 40p/mile you can't claim road tax on top?

Providing a coffee to a customer at a meeting cannot be claimed as it's 'entertaining'

Again grey. Some people would call this entertaining, others would argue the coffee was "merely incidental" to the meeting and allow it. To be honest, the time taken of keeping/filing a receipt for a coffee and enterring it into your books probably makes it not worth it.

Teenager childrens can be employed within the business (admin) etc on a part-time basis up to the personal allowance

Make sure you do it all legally and yes, that's ok. But (on top of legal things like minimum wage, employing minors etc) you'll also need to be able to show that they do something reasonably worth what you're paying them. Conveniently paying 4 kids exactly the personal allowance would look very suspicious (and also attract NICs...so you'd actually want to pay below that).

Happy to hear other accountants views on the above...as like you suggest, these are (ignoring road tax one) grey areas, so down to argument.

 

[David Griffiths]

Allowable...though if you're taking the mickey, eg buying a 4 bedroom house and each month changing which room is your office to decorate it, HMRC would take a very dim view.



This isn't true...the accountant may have meant if you're claiming the 40p/mile you can't claim road tax on top?



Again grey. Some people would call this entertaining, others would argue the coffee was "merely incidental" to the meeting and allow it. To be honest, the time taken of keeping/filing a receipt for a coffee and enterring it into your books probably makes it not worth it.



Make sure you do it all legally and yes, that's ok. But (on top of legal things like minimum wage, employing minors etc) you'll also need to be able to show that they do something reasonably worth what you're paying them. Conveniently paying 4 kids exactly the personal allowance would look very suspicious (and also attract NICs...so you'd actually want to pay below that).

Happy to hear other accountants views on the above...as like you suggest, these are (ignoring road tax one) grey areas, so down to argument.

I'd agree with all of those. I'd think that the coffee question is more onthe white side than the black side (Sorry!) If it's at your own office, provision of refreshments is quite normal. If you meet in somewhere like Starbucks then the cost of a couple of coffees is cheaper than hiring a meeting room.

I also agree that you need to be certain that you can demonstrate the work done by children, that you comply with the law about employing children - is there a limit of 13 years or older?

 

[Zeno]

What is meant by decoration can be contentious. To some this may extend to paintings which are only allowable in the unlikely circumstance that you are running a hotel. Anything structural is likely to cause issue too.

Watch out for the legal aspects of employing under 18s etc as David mentioned. This varies from local authority in terms of ages, allowable work, maximum hours etc.

 

[JamieAllen]

Much appreciated, thanks.

Jamie