Where is the best place to find out what can be classed as tax deductable for self employed people?
He is working as an owner/driver van courier and will also be doing vehicle repairs at times. Can he for example claim for tools etc for the repairs?
Answers:
He will need to retain records of the income he earns and the expenses he incurs. Expenses are split into two categories, revenue expenses which can be claimed against income and capital expenses that are not deducted from income.
Revenue expenses will be day to day costs that he incurs wholly and exclusively for business purposes, for example fuel. If he uses the vehicle for private trips then he will have to keep records of the private mileage and adjust the fuel expense accordingly. He will not be able to claim expenses for anything that has a private element, like his lunches or a newspaper in the morning. Revenue expenses are deducted from total income and he will pay tax on the remainder.
Capital expenses are those incurred to enable you to carry out a trade, for example the cost of his van or the tools he purchases. The costs of these cannot be claimed against his income. Vans and tools are eligible for capital allowances. This allows a set percentage of the cost of the tools to be claimed against income each year like an expense.
This is a basic outline - I would recommend that your son makes an appointment with a small local accountant that will set him up on a recording system then at the end of the year produce his accounts and prepare a tax return. It should not be terribly expensive - get him to obtain quotes or go off recommendation.
Anything and everything required to conduct a business is a business expense, they are all deductable.
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