If you’re an independent worker and made over £1,000 last tax year (between April 6th 2019 and April 5th 2020), you’ll need to file your tax return by 31st January. Hear the top tips from tax experts J.D. and Katherine from Finmo...
#1: Keep records!
Your most important job when it comes to taxes is tracking your income and expenses. From food, to fuel, to your phone and more, you need to keep records of every income and every business expense. HMRC don’t like estimates!
Ideally, it’s best to keep a separate business and personal account, so you can see exactly which expenses are business ones. It’s also good to keep receipts or a record of business expenses as you go.
But if you’ve not done that, don’t panic! You can go back and tag all your business expenses using Finmo’s free tracking app.
Just link up your bank account to catch up to 50% more expenses*:
* Based on an average user
#2: Know what counts as a business expense
If you’re on a fixed phone contract for your personal phone, you can’t claim that as a business expense. But if your work means you go over your plan and need to pay extra - for example, for data - you can claim that additional cost as a business expense. If you have a phone specifically for work, you can claim that too.
Bike or motorbike
You can claim for capital allowances when you buy a bike or motorbike for work.
When you buy a car you can claim 24% as a business expense if the C02 emissions are less than 110g/km, or 6% if C02 emissions are higher than that.
If you’re ‘itinerant’ - meaning you work on-the-go rather than from a fixed location - you can claim the whole day as a business journey, from when you leave home in the morning to when you return at night. Using an app like Strava can help you keep track of how many miles you travel.
If you don’t have an office or a place you go consistently for work, you can claim reasonable meal costs for every day you work - although you can’t claim on any meals you buy for other people. If you have an office or work from home, you can only claim meals if you’re travelling for work.
You can claim simplified expenses if you work from home for over 25 hours a month - so around an hour a day - you’ll be able to claim £10 a month in expenses. Alternatively, you can claim actual expenses - part of your rent or mortgage interest and other household bills. Speaking to an expert can help you with this calculation.
You can claim accountancy fees, including technology used for bookkeeping, as a business expense.
#4: Know how much you owe
As an independent worker, you’ll need to pay both income tax and National Insurance. Your first £12,500 is income tax-free and you won’t start owing National insurance until you reach £6,450 of taxable income. After £12,500, you’ll pay 20% income tax on the next £37,500. You need to file a Self Assessment and declare any income over £1,000.
Work out roughly how much you owe using Collective Benefit’s free tax calculator:
#5: If in doubt, get some expert advice
Doing your taxes can be complicated - especially if you work multiple jobs or are unsure about your expenses.
If in doubt, experts are on hand to help. As a Collective Benefits member, Finmo’s team of tax experts and accountants will help you perfect and file your Self Assessment online for just £119. That’s 20% less than the standard rate and much cheaper than hiring an high-street accountant.
Sign up for discounted help here:
Take a look at some key resources we’ve put together to help you understand everything you need to know about tax.
Criteria for completing a Self Assessment:
Registering for a Self Assessment:
And a big thanks to Finmo for sharing their top tips!
Find out more at www.finmo.co.uk