Sole Trader Tax Write offs

Wavey

Hello all,

I have recently started working as a sole trader doing autocad.
I am trying to decide weather or not do my own tax returns or to hire an accountant.

There seems to be strong argument for both methods.

Has anyone got any experience of doing there own returns and what items can you write off?

I wouldnt have any big expenses like business trips or equipment and i am office based so im not too sure about deducting my car expences.
Also if i start to write off petrol and car depriciation would that mean that I would have to insure my car as work related and end up paying more insurance?

Any advice appreciated.

cheers
Wavey

halkar

Not sure about for Sole traders, but you have to buy the car on your company name before you can claim insurance, petrol, maintanence and tax as expenses and pay BIK.
Car depriciation is done every year with your audits and again not sure for sole traders. Sounds to me most of those you are asking for probably be easier to manage with limited company setup and it is better to have an accountant do your yearly returns and audits if you will buy a car on your company.
I wouldn't advice you buying car on your company name unless you know that you will be still trading some time to come. Laws have changed and you can not write off a company car for 8 years, used to be 5 and also a lot of BIK changes too this year. Best to see an acountant and take their advice on what route to take depending on your requirements.
All the best.

MrNuked

You can write off anything that you use directly in the course of your work. Most obvious is your mode of transport. I wrote off my dart tickets only when I did it. Ask someone in the tax office for advice I got someone very helpful.

gamer

My advice is for gos sake hire accountant he charges u 500 per year for doing complete taxreturns and preliminary tax and u get 500 taxallance 4 this cost to u zero. may charge 50 per hour for extra consultations say ur getting mortgage etc buying premises so on.I know loads of so called SMART sole traders who are now out of business redundant cos they thought they could save accountancy fees doit all themselves and they got BURIED under a mountain of tax technicalitys failed to keep proper tax and VAT records reciepts ,,in my experiece revenue simply
dont believe trust a tax return thats made out by a sole trader they much PREFER it if u hire an accountant especially if turnover per annum exceeds 25k .
IST RULE of tax returns is 90percent of ur taxallowances depend on reciepts if u dont keep all reciepts 4everything uwill pay DEARLY at the end of the tax year. if u r claiming back VAT he,ll probably charge you more than 500.dont forget allowances tax laws chaNge EVERY YEAR ,,its the accountants job to keep up with them.YOUR job is to keep your business going make a profits.

Figment

You can also claim a portion of your home rent/mortgage if you are working from home.

MrNuked

How large a portion of rent can you write off? Is it equal to the portion of time you spend there doing work?

eth0_

Originally posted by Figment
You can also claim a portion of your home rent/mortgage if you are working from home.

Does this apply across the board or just for sole trader? I'm setting up a partnership with a friend..

thegills

How large a portion of rent can you write off?

I think it is proportional to the size of your home office to the size of your house. So if your house is 2000sqft and your office is 200sqft then you can include for 10% of your mortgage / rent in your allaowances. The same also applies to bills (Heating, ESB, telephone, etc.)

viking

Originally posted by thegills
I think it is proportional to the size of your home office to the size of your house. So if your house is 2000sqft and your office is 200sqft then you can include for 10% of your mortgage / rent in your allaowances. The same also applies to bills (Heating, ESB, telephone, etc.)

The above is true.

Save yourself the hassle and get an accountant, you'll be glad you did.

viking

Kobie

The trouble is that you can claim for everything until you get caught. Different accountants will tell you different things, but be sure that you can't claim your DART & travel expenses. Travel to and from your normal place of work isn't claimable any more than it is for a regular PAYE worker, and if you're working freelance you normal place of work is not your home or registered company address, but where you actually carry out the work.

Buying a car through your company might be more trouble than it's worth. You'll also have to pay tax on it as it counts as benefit in kind (as does stuff like VHI).

So get an accountant but beware - accountants can tell you whatever they like because when the revenue come calling it's you who are 100% responsible for your own taxes, not them.

thegills

and if you're working freelance you normal place of work is not your home or registered company address, but where you actually carry out the work

This is not entirely true. You can register your home as your place of work and then you can say once a week you attend your customers premises for say an update meeting (eg) and then claim for travel expenses (lunch, dinner, overnight if needed).
thegills

Kobie

Well that just agrees with what I said - if you work at home then your home is the place where you actually carry out the work. You can then claim for incidental trips to the clients site. But if you're based mostly on the clients site, that becomes your normal place of work, and you can't claim for travel expenses.

RicardoSmith

Originally posted by Kobie
Well that just agrees with what I said - if you work at home then your home is the place where you actually carry out the work. You can then claim for incidental trips to the clients site. But if you're based mostly on the clients site, that becomes your normal place of work, and you can't claim for travel expenses.

Same thing if you are working as a contractor. You can't claim the trip to the main workplace. Only subsequent trips away from the office.


I thought that if you claim for some expenses like rent, from yourself, that you can be charge capital gains on those kind of things. Is there some other catch when you go to sell the property or something?

anykaxopom

In case of a small business, if you keep your records simple, and write a good explanation of every item on your bank statement, you might well get away with 500 a year which is not that much if you think about it. You might also try to fix your own car, but most people would go to a garage somehow.

Company vs Sole trader:
Consider setting up a company if you can be sued by your clients, want to limit liability and not to worry about losing your shirt + house.

Setting up and running a company is dearer than operating as a sole trader or partnership. It will cost you something to close the company if you dislike your initial business idea. Companies are more tightly regulated than sole traders. Your total tax bill might be higher in case of a company. Your accountant would charge you more, too.