Self Employed - Allowable expenses - ADSL?

  Sir Radfordin 23:09 10 Aug 2006

Just remembered I'm supposed to do one of those pesky tax returns as I'm registered as self employed - for the minimal amount of 'extra' IT work I do. So just about computer related...!

Anyway, the work I do requires an internet connection - just so happens to be ADSL. Anyone know how the tax man would treat that as an allowable expense?

Obviously I use the connection for more than just 'business' so is the logic you only claim a percentage for the business? If so...what?

Any thoughts?

  Forum Editor 23:53 10 Aug 2006

but it's certainly worth exploring. In general terms the Revenue will want to see evidence to support your claim that internet access is an allowable expense - in whole or in part.

If you were a share trader, working from home for instance, they would certainly allow you to claim the connection as an expense.

My advice is to consult an accountant on this.

  DieSse 02:09 11 Aug 2006

I would have thought that good communications and "keeping up to speed with technology" are a vital part of any "small business" - just like a telephone, and totally essential for an IT related business.

Personally I would just claim for it - the worst that can happen is that they'll query it, and you can make a good case for it being a necessary expense. I don't see that it being ADSL is relevant.

As for the percentage thing - well it's flat rate - so personal use does not form part of the "necessary expense" part. You "must have" it for business - so personal use is irrelevant.

Do you claim for part of your home being used for business, and electricity, heating, rates, etc? - you can, I beleive.

  DieSse 02:15 11 Aug 2006

And your computer and software - particularly any special diagnostic parts and software.

For instance an external caddy to test hard drives should be allowable. As might some spare parts kept for testing purposes, such as a PSU.

Just think hard about what you have that you use either in part or exclusively for what you do.

  terryf 03:40 11 Aug 2006

What the eye doesn't see, the heart doesn't grieve over

  wee eddie 08:12 11 Aug 2006

If you get a special allowance for this, or that, at Home.

You may then get your Rates changed by the Council to reflect that you are now using your Home as Business Premises/Office.

  freaky 09:55 11 Aug 2006

I am classed as self-employed and need a PC as part of my occupation. My accountant includes all PC running expenses including internet charges, and also cost of various upgrades to the PC and depreciation.

As regards wee eddie's comment regarding using your home as an office. Provided you only use one room, then you can claim a tax-allowance on this and your council tax will not increase either.

  freaky 10:21 11 Aug 2006

I will also add the following.

If you use more than one room as an office, and claim tax-allowance on all the rooms used - then if the house is subsequently sold at a gain, then part of the gain would be apportioned to the rooms used as an office - giving a liability to capital gains tax !

  spuds 12:13 11 Aug 2006

because it can effect various things if you are claiming self employment. As highlighted above, it may well cause concern with the council via rates and taxes, mortgage or landlords as to premises usage and insurance companies, especially to equipment cover.

I ran a business, of which some of it was conducted from home, hence my comments. You will find that a good accountant will offer an introductory session, which attendance is very advisable. The Inland Revenue also provide free literature and a very helpful customer service helpline. You may even be able to claim on your subscription to the PCA magazine and other 'trade' magazines!.

  Sir Radfordin 12:37 11 Aug 2006

Thanks for all the comments. Thought it would be the minefield you've shown.

From bits I've read before have been given the impression there is a difference between 'running a business' from a home and 'working from home'. If that fits any legal definition I don't know.

It does demonstrate the daft amount of 'red tape' we have for the small businesses. You try to do things properly by declaring income which is really earnt through a 'hobby' (I have a "main" employed job) but then find you end up with millions of other things to work out. No wonder people opt for 'cash in hand'.

  spuds 13:15 11 Aug 2006

Sir Radfordlin-- The problem with cash in hand, is that the 'good' guys are more likely to get caught, the 'bad' guys seldom do :o(

Would also mention that being 'self employed', and having a main job, can also effect your 'other' legal contributions to 'the system'. Best to get advice asap, perhaps CAB for free!.

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