Self employed entitlements

PCPhoto

Just wondering... does anyone have a link to what a self employed person is entitled to claim, I work as a freelance photographer and for the purposes of income tax/VAT returns I'm curious as to what is allowed:

I've heard of stuff like the list below being written off against Income Tax.
- Parking can be written off while on the job.
- a lunch allowance (€15), if out of the office for 8hrs or more
- purchase of newspapers, to check if yesterdays work earned any money.
- Diesel (driving to and from jobs) - and VAT from diesel
- Depreciation of equipment (25% per year)
- Clothing allowance of €200 per year, if its work specific.
- purchase of magazines (work related....for research)
- college/online study courses
- car repairs (car is required for work)
- car tax/insurance
- internet bills
- mobile phone bills
- portion of household bills (I rent in a house bills are split equally)
- church dues or charitable donations (€250 a year...no receipt required)

is there any that I may have missed, or others which are generic? ...or some which are specifically for freelance photographers?

I've been told that if you send images via email the rate of vat is 13.5% ....but if you give them a CD of images its 21% (or maybe thats reversed ...I dont know)

Anyway... any help in assisting me (and others who are in a similar position) with understanding entitlements.... much appreciated !!

Thanks(In advance)

Builderfromhell

Your photographic equipment including cameras.
Overseas travel if work related including hotel etc.

Cunning Alias

I have an incredibly honest accountant (i seem to have found the only one in ireland ) and he summed it up like this.

If it is something that is completely or partially used for the business, I can claim.

Im a programming consultant.

E.g. I use my car about 25% for work. Therefore I am able to claim 25% of car related costs.

Any software or hardware that I buy that is specifically for the business I can claim 100%

I can claim a percentage of my mobile bill as it is for business and personal use.

I would check with an accountant about your rent, bills etc. I know I was not able to claim for them as they are normal living expenses. If it was rent and bills for an office then you would have no problem.

I doubt lunch would be covered but I am curious to see if other people claim for this.

For some of my jobs I get the bus to avoid sitting in traffic for hours but I was told I could not claim my bus fares. Does anyone do this (who has been audited)?

voxpop

lunch aint allowed - you eat to live not work seemingly.

as mentioned you should only claim a percentage of your car expenses and home bills - assuming your home is your place of business

Depreciation of equipment - I think this is how you are supposed to write off assets purchased - i.e. if you buy a laptop, you are strictly not supposed to write it off straight away but over 4 years

Never heard of the clothing allowance ??

Diesel - you can claim the vat back at each VAT3 return, not sure on the rest but you need to keep reciepts

charitable donations is a new one on me - esp the no receipt thing - I thought everything claimed needed a receipt for self-employed (ltd company is different)

Btw Im not an accountant - but am self-employed

PCPhoto

voxpop wrote: »

lunch aint allowed - you eat to live not work seemingly.

charitable donations is a new one on me - esp the no receipt thing - I thought everything claimed needed a receipt for self-employed (ltd company is different)

Thanks for all the advice so far....(all three of you)

from what I'm told .... the charitable donations thing .... "the church dues" .... when you receive an envelope from the church asking for "dues" .... this can be written off (so I'm told)

The lunch thing I'm told is only if you are out of the office for 8hours+ ... it's a sustanance thing, meal allowance.

My (rented) home is my "office" but my day is generally spent working at X location.... my registered office is my parents address 150miles away from where I live.

Its amazing how difficult it is to find out what the full list of entitlements are...it seems there's so many people claiming different things even revenue are unable to give a specific list.

Cunning Alias

If someone could clarify the home office area it would be great.

Just a word of warning. When you look at threads here where people are saying that they claim for everything under the sun, take it with a pinch of salt. Chances are they are chancing their arm and will end up getting screwed when the audit comes.

Alan Shore

voxpop wrote: »

charitable donations is a new one on me - esp the no receipt thing - I thought everything claimed needed a receipt for self-employed (ltd company is different)

These are not business expenses they are income tax deductions. A donation in excess of €250 per annum to a registered charity is allowed as a deduction in your income tax return.

voxpop

Cunning Alias wrote: »

If someone could clarify the home office area it would be great.

Just a word of warning. When you look at threads here where people are saying that they claim for everything under the sun, take it with a pinch of salt. Chances are they are chancing their arm and will end up getting screwed when the audit comes.

My understanding is that you can set aside a room as a designated office for your business and then take a percentage of esb/gas/internet as office expenses. If you own your house - there may be capital gains issues if you ever sold it - im renting so havnt looked into that.

I agree about ppl claiming for everything - there is a limited amount that you can claim for and it all has to be receipted for a sole trader.

chook

- Depreciation of equipment (25% per year)

You want to check that. AFAIK it is over 8 years, i.e. 12.5% per year (which is insane for things like computers with a useful life span of 3-4 years).

barneystinson

chook wrote: »

You want to check that. AFAIK it is over 8 years, i.e. 12.5% per year (which is insane for things like computers with a useful life span of 3-4 years).

You only write it off over 8 years for as long as it is in use as an asset of the trade. If it becomes obsolete after 3-4 years and you buy a new one, you can claim a balancing allowance for the remaining value that you haven't yet written off. Or if for example it gets fried in a lightning storm after 6 months, you would claim the full cost in Year 1. (Although you might encounter skepticism on the part of a revenue auditor over that explanation! ) The 12.5% / 8 year lifetime of an asset, is there to stop people from taking the absolute p1ss with outrageous depreciation rates, which they would if they could.

Although, if you REALLY had to, depending of course on what line of work you are in, you could make a computer last 8 years... seeing as you'll only have used it once or twice a week for keeping your business records (unless you've added back a portion of it for personal use...! )

barneystinson

Cunning Alias wrote: »

If someone could clarify the home office area it would be great.

It's very simple really, it comes down to two words: "WHOLLY" and "EXCLUSIVELY". Section 81 of the Taxes Consolidation Act 1997 quite simply says that

(2) Subject to the Tax Acts, in computing the amount of the profits or gains to be charged to tax under Case I or II of Schedule D, no sum shall be deducted in respect of—

(a) any disbursement or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade or profession;

(b) any disbursements or expenses of maintenance of the parties, their families or establishments, or any sums expended for any other domestic or private purposes distinct from the purposes of such trade or profession;

And it continues on, but those 2 little paragraphs pretty much answer your question CunningAlias. I'm not being facetious, but it ain't rocket science:

If I audit a tradesman, say a plasterer, who clearly doesn't have to carry out any of his work from his home, other than whatever amount of bookkeeping or admin is required, then I'm not going to allow him to claim a sizeable potion of his ESB, Gas, or home telephone (though I'll probably allow him all of his mobile phone bill), since it is extremely unlikely that any of these household expenses are increased as a result of his trade.

However, my brother is an engineer, and he has a home office, which is where he spends a majority of his working time, so he can stand over a claim for a proportion of these household costs, as he uses heating, electricity and phone in the course of his work at the house.

So, there are no simple one size fits all answers here, as it all depends on the circumstances; if you can put forward a reasonable argument that it's been incurred for the trade then it's deductible, otherwise it's not.

I hope that's some kind of clarification!

chook

barneystinson wrote: »

You only write it off over 8 years for as long as it is in use as an asset of the trade. If it becomes obsolete after 3-4 years and you buy a new one, you can claim a balancing allowance for the remaining value that you haven't yet written off.

Thanks Barney for clarifying that. Do you happen to have a link for that? I've always just continued to write off the annual 12.5% until the 8 years were up even if I got a new one. I suppose it does not make much of a difference in the end but I'd rather do it right; just never read it could be done that way.

Although, if you REALLY had to, depending of course on what line of work you are in, you could make a computer last 8 years... seeing as you'll only have used it once or twice a week for keeping your business records (unless you've added back a portion of it for personal use...! )

True, true. I work almost exclusively on the computer, every working day, and have made my current one last 7 years so far , but it is becoming a burden (not enough speed & RAM for today's large files and programmes) and I'm scared stiff of it packing in :eek:, so I'm shortly going to get a younger 2nd hand box (company discard for a couple hundred from a trusted source). Can't afford a proper new one. It all depends on how much you use it alright. For bookkeeping a very simple system suffices.

barneystinson

chook wrote: »

Thanks Barney for clarifying that. Do you happen to have a link for that? I've always just continued to write off the annual 12.5% until the 8 years were up even if I got a new one. I suppose it does not make much of a difference in the end but I'd rather do it right; just never read it could be done that way.

http://www.irishstatutebook.ie/1997/en/act/pub/0039/sec0288.html#sec288


The parts relevant to you are:
"any event occurring after the setting up and before the permanent discontinuance of the trade whereby the machinery or plant ceases to belong to the person carrying on the trade (whether on a sale of the machinery or plant or in any other circumstances of any description)",
"any event occurring after the setting up and before the permanent discontinuance of the trade whereby the machinery or plant (while continuing to belong to the person carrying on the trade) permanently ceases to be used for the purposes of a trade carried on by the person,"
"an allowance or charge (in this Chapter referred to as a “balancing allowance” or a “balancing charge”) shall, in the circumstances mentioned in this section, be made to or, as the case may be, on that person for the chargeable period related to that event."

And the balancing allowance / charge is basically the difference between what you get for the asset when you sell/stop using it, and the amount yet to be written off the original cost of the asset.

chook

Thanks Barney.
I reckon Par 2 is even more relevant because when a comp goes bust there is "no sale, insurance, salvage or compensation".

(2) Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the machinery or plant still unallowed as at the time of the event exceeds those moneys, a balancing allowance shall be made, and the amount of the allowance shall be the amount of the expenditure still unallowed as at that time or, as the case may be, of the excess of that expenditure still unallowed as at that time over those moneys

So I understand from that that if I buy a computer say for 1000 Euro and write off 125 per year (8*125=1000) and the hard drive packs in after 4 years, then I can put in for a balancing allowance of 500 Euro in Year 5 and for the normal capital allowance for a new machine.
Or else, if I'm a bit of a techie and take it apart and sell some of the functioning components for 50 bucks I can put in for a balancing allowance of 450 Euro.
Correct?

barneystinson

Yep that is correct.

chook

Thank you, kind stranger, just learned something new.