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CIS Subcontractors: A guide to allowable expenses

As a subcontractor, the easiest figure to calculate for your self-assessment income tax return is your income: it’s the sum of the monthly CIS statements you have received throughout the year from your contractors and from which you can calculate the total amount of income tax deducted at source. But what about expenses that you can claim against such earnings? You may well have read or heard conflicting advice as to what you can and cannot claim on your self-assessment income tax return – so what’s the truth? What expenses can you claim on your self-assessment income tax return?

Materials, Tools and Equipment

The most obvious expenses are for any materials and/or consumables that you’ve used on site, business insurance, tools and equipment that you have bought and the costs of maintaining and servicing the ‘tools and equipment of your trade’.

Motor Expenses / Mileage Allowance

You can also claim the business proportion of your motor expenses, whether you drive a van or a car  or a motor bike. You can Include your road fund licence, insurance, petrol/diesel, MOT, servicing, repairs, HP/loan interest, parking and toll fees, AA/RAC/Green Flag cover, vehicl washing etc and if, for example, your ‘business’ journeys amount to 75% of your vehicle’s total mileage, then you can claim 75% of all these costs on your self-assessment income tax return. However, it may be more advantageous for you to claim using the mileage basis instead of going by costs, by simply claiming 45p per business mile for the first 10,000 business miles, and 25p for every further business mile.

Internet, Phone and Stationary

The business proportion of your internet and phone costs, whether a home phone or mobile, may also be claimed along with stationery costs you’ve used for business like postage, stationary and printer ink etc.

Protective Clothing

Claiming clothing costs is a contentious area. As a subcontractor, you can claim for personal protective equipment. This would include clothing that protects you (such as overalls, hi-viz jackets, trousers with padded knees) and equipment like helmets, steel-capped boots, gloves, goggles etc. You can also claim for the cleaning and laundering and maintaining of your workwear but you cannot, unfortunately, claim for ‘normal’ every day clothing worn while you’re working. Clothing is worn for “warmth and decency” (as the Revenue put it) and for work at the same time. This situation where there is simultaneous private and business usage is known as “dual purpose”. Tax deductible expenses need to be “wholly and exclusively” for business, and due to this dual purpose, normal clothing bought while working does NOT qualify for tax relief.

Home Office Expenses

If you work from home – such as writing up quotes and invoices, looking for or buying business materials online, planning your work schedule etc – then you may claim part of your home bills. However, as it can be time-consuming and difficult to work out how much of your home bills relate to your business, a practical alternative is to use the Revenue’s “simplified expenses” rate: if you use your home for business for at least 25 hours per month, meaning you can claim at least £10 of costs a month.

Administration expenses

A spouse or other member of your family who helps you (perhaps with administration and/or bookkeeping) may be paid reasonable remuneration for their work, providing the Revenue’s “RTI” rules are adhered to: talk to us about this if you would like further information.

Sundry expenses and Subsistence allowances

As you work from home, you are regarded as being on ‘company’ business as soon as you set off for work (whereas, if you are employed, you are not ‘working’ until you arrive at your employer’s work-site) and can qualify for a daily ‘subsistence’ allowance and, if aplicable, for any overnight accommadation while ‘staying away’. And, of course, any professioal/accountancy fees incurred in the preparation of and submission to HMRC of your self-assessment tax return are regarded as allowable expenses!

If you are in any doubt as to whether you can claim certain expenses, please retain all of your receipts and we can advise you

when we prepare your self-assessment income tax return as to whether such expenses are allowable against your income.

The Taxback Service Company have dealt with self-employed CIS Subcontractors for over 40 years and offer a wealth of experience in sourcing income tax rebates for such contractors, providing a fast and efficient and economical service. What is more, as agents registered with HMRC, we can usually source your income tax repayment within weeks (if not days) and are also able to review your tax affairs for the previous three tax years, to ensure you have claimed ALL of your allowable expenses in the past.