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Where Taxpayers and Advisers Meet

Expenses on other income

TB2019
Posts: 4
Joined: Sun Oct 06, 2019 11:24 am

Expenses on other income

Postby TB2019 » Sun Oct 06, 2019 11:34 am

Hi,

My main source of income comes via being an employee and paying PAYE, however I also do some consultancy where I am not employed by the company and simply get paid the money directly.

I currently declare this on my tax return under Other Income and ultimately pay 45% tax on it.

The other income work relates to software and IT consultancy.

I have been lapse in that I have not been claiming any expenses against this work which I believe I should as I am incurring costs to complete the work, e.g. buying printer ink, paper, computers, etc.

My current personal computer is old so I am thinking of buying an iPad to allow me to fulfil this work. E.g. use it for emails, writing documents, Skype, mobile apps, other software and IT related tasks.

Am I correct in thinking that I can buy this and use the amount to deduct from the income tax due?

Also I am thinking of buying the iPad in Spain when I visit shortly as it is cheaper in Euros. I assume as long as I keep the receipt I can still deduct the expense and it doesn't matter that it was purchased in Euros in Spain?

Thanks

Jholm
Posts: 108
Joined: Mon Mar 11, 2019 4:22 pm

Re: Expenses on other income

Postby Jholm » Mon Oct 07, 2019 9:03 am

Yes - you would deduct the % that you expect to be for business usage.

Jholm
Posts: 108
Joined: Mon Mar 11, 2019 4:22 pm

Re: Expenses on other income

Postby Jholm » Mon Oct 07, 2019 9:03 am

Be mindful that if this income is becoming quite regular, it could be deemed self-employment, for which you could be liable to class 2/4 NICs.

TB2019
Posts: 4
Joined: Sun Oct 06, 2019 11:24 am

Re: Expenses on other income

Postby TB2019 » Mon Oct 07, 2019 9:26 am

Many thanks.

I believe that it would be 100% as the sole purpose for buying it is to allow me to fulfil the work that I am getting paid for.

So say for example I received £5000 in the year and the iPad costs £450, I would just work out the tax to pay on £4550?

Buying in Spain doesn't matter too? Just keep the receipt/invoice and convert to pounds based on the exchange rate that day?

jerome.lane
Posts: 237
Joined: Mon Aug 12, 2019 8:41 am
Location: Sandhurst, Berkshire
Contact:

Re: Expenses on other income

Postby jerome.lane » Mon Oct 07, 2019 10:59 am

Hi, it appears you are incorrectly preparing tax returns. Your other income should be classified as self employed income. As an additional rate tax payer, you would probably be well advised to seek tax advice and consider incorporation as an option. The expenses will be tax deductible subject to apportionment for any private use unless that's negligible.
Jerome Lane
Tax Adviser
Telephone: 07943 005902


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