Self Assessment Expenses

by **anthonypaul** on Mon May 23, 2011 2:16 pm

My wife is just completing her EOY self assessment and needs advice on several things. She 'hires' her mother's car for business purposes two days a week and gives her mother £20 per week for this - how should this be reflected? She also pays our son £25 per week for internet work and other business assistance (he works a minimum of 5 hours a week for her). Both of these transactions are cash in hand expenditures and she is wondering the best way to present them to the tax office. In addition, she sold her workshop and had to move out and gave a lot of stock to charity shops - is there any way this stock can be claimed for?

regards

Paul

by **section 44** on Mon May 23, 2011 3:27 pm

Does she intend/expect to claim a tax deduction for either of these payments?

by **mullet** on Mon May 23, 2011 4:33 pm

Assuming that she wants the deduction (which is inferred in your post) and corresponding tax relief (but please answer S44's question):

If the amounts are laid out wholly and exclusively for the purposes of the trade (profession or vocation) then they are deductible. But it gets complicated with family members, particularly when own children are involved. A few questions and points:

How does the £20 per week equate to the fuel cost of (say) 15p per business mile? Is your wife using half a tank of fuel and simply reimbursing the £20 cost? Or is there some wear and tear element to the payment? The 40p per mile (now 45p) allowed by HMRC allows for maintenance and depreciation etc.

I take it that your mother in law does not "hire" her car to the general public, and that she does not declare this as business income in her own right.

How old is your son? Is there an identifiable benefit to your wife's business which could be proved to HMRC's satisfaction? What is your wife's business? What precisely does your son do? Is this pocket money?

by **anthonypaul** on Tue May 24, 2011 9:50 am

Hello, yes, son is 18 and provides cleaning and general maintenance to shop plus internet work (photography etc.) for my wife. He does actually produce an identifiable benefit that could be shown to the HMRC. My wife travels well over 100 miles per week buying goods for her online business, sourcing suppliers, trade shows and events etc. - she saves all of the fuel receipts in addition so would we add up the car 'hire' and fuel expenses and list them as one - showing that the mileage has been travelled?

Thanks for your help

by **anthonypaul** on Tue May 24, 2011 9:55 am

Sorry, forgot to ask about the goods donations to four local charity shops that were undertaken when she closed her workshop - is there any way these are deductible? and if so, how? And no, the sons's wage is definitely not pocket money - its real work and if he didn't do it she would have to get someone else to help

regards

Paul

by **Incredulum** on Tue May 24, 2011 2:34 pm

Goods deductible.

Effectively you just write them down to nil value and then throw them away.

by **mullet** on Tue May 24, 2011 5:28 pm

Goods deductible.

But be careful not to double count the expense. Let's say that the items originally cost £500. If you have already included the £500 within purchases, then simply count as £nil in closing stock and do nothing else - you have had the deduction and you don't claim £500 again as you give the items away.