tax question

[FlyingGasMain]

Sorry, bit boring I know !

I was instructing full time for 4 months last year and declared myself self-employed. I then got a salaried Ops job which I felt was safer for the winter.

My question is, when filling out my tax return, what can I claim tax relief against as allowable expenses for when I was an FI ?

The list I've got so far is :

Medical
Headset repairs
Uniform

One that I'm not sure about is mileage to and from the airfield.

Any advice much appreciated

FGM

[DFC]

One that I'm not sure about is mileage to and from the airfield.



You can pay yourself a mileage allowance for any journey made in the course of your business if you want.

However when it comes to tax the following applies;

1. You can not claim tax relief on mileage allowance payments where the journey is to or from your normal place of work. In this regard ask yourself where your base is? is it the airfield or is it your "office" which may be at your home? If I was looking into something in this regard my first step would be to check what the address of your RTF is registered at. It costs nothing to regiter an RTF.

2. The amount you pay yourself per mile is up to you. If you pay more than the rate set by HMRC - check their website then you have to pay tax on the excess. If you pay yourself less then you can claim against tax the difference between the amount paid and the amount permitted by the HMRC.

The HMRC website gives you all the info you need regarding mileage etc etc. in the form of leaflets and further guidance.

3. If you claim that your "office" is at your home but every day of the year you claim mileage to abc airfield and never to any others, then it would be reasonable to say that abc airfield is your normal place of work unless you can show that you also provide certain aspects of your services such as groundschool at your "office" i.e. there are times where your business provides services but you do not have to leave the "office".

4. Be careful with 3 above because if you are providing a service at youyr home then the local authorities would just love to be able to catch you for breach of planning requirements, non-payment of commercial rates and so on and so on.

Therefore, unless you are travelling a long way to the only operator you work for, it is best not to claim for the for example 10 miles or less each way that takes you to the nearest airfield but claim mileage for all places you have to travel to that are further away. For example journeys to attend seminars, shows, work at other locations, medical renewals, prospective clients and so on...all of which are further away than your normal place of work.

Regards,

DFC

[FlyingGasMain]

Thanks for the comprehensive info DFC. I think I'll skip claiming a mileage allowance based on the above !

[charliejulietthotel]

When I started my airline job I was told I can claim £850 tax reductions because I was a uniformed pilot. stuff for dry cleaning, headsets etc etc etc, mentioned it to some of the other instructors I used to work with, not sure if they followed it up, but it was a case of phoning up the local tax office, saying I was a uniformed pilot working for such and such company, and the tax code was changed there and then, simple! Good luck :ok: CJH.

[thecontroller]

see here

Airline pilots: industry wide FRE for 2006/07 onwards: introduction (http://www.hmrc.gov.uk/manuals/eimanual/EIM50050.htm)

[DFC]

I think I'll skip claiming a mileage allowance based on the above !

Don't forget that as always the above is simply my opinion. I receomend that you check out the exact info from the HMRC website (can be done in an hour or less) before making a firm decision.

The Uniformed pilot's allowances (there is more than 1) would be difficult for instructors who were not working for an AOC holding operation who used a uniform etc to get and all but impossible for self employed instructors.

However, just taking the computer allowance example - as a self employed person you could claim a capital allowance for the purchase of a computer you need for your work with no questions asked by the taxman but if you claim the uniformed pilot's computer allowance you will have to justify the whole need for a computer to the tax man and they may still say no!

Regards,

DFC

[gibr monkey]

As a self-employed pilot you can not claim the £850 tax free allowance outlined by the HRMC for pilots , why because you have to do it the hard way, by showing the receipts to the tax man/ accountant. I asked this question to the tax office last week.
You can claim buying a lap top is needed , if you need to be contactable by email away from base/ home

[DFC]

Google the word taxcalc and save yourself a fortune and a whole load of hassle.

The "accounts" can be a simple 5 column spreadsheet - Date, Details, Money In, Money Out, Balance.

Regards,

DFC

[theavionicsbloke]

FGM

You may want to think about saving yourself the headscratch and employ an accountant. You can then put his/her 'Professional Fees' against TAX.

I have found it money well spent in the past. A good one will normally get you more than expected and stop you from coming to the TAX mans attention by stopping incorrect returns being forwarded. He is also less likely to question a chartered accountant.

Be prepared, it's not your next return, or the one after that but up to 6years later that you could become the focus of a random TAX investigation.

So...get your house in order by keeping accurate records, getting an accountant to draw up a financial statement for you and have them file your SA may save you a lot or heart ache in the distant future.

[theavionicsbloke]

Oh... by the way

Keep receipts and claim everything that is legitimate business expenditure.

Pilots allowances are aimed at full time employed pilots.

As self employed the following is genuine business overheads, ie Things that you have to buy to run your business and provide an efficient and competative service.

So that includes....

Fuel, car repairs, MOT's TAX, Insurance. Office equipment, stationery, postage, computer consumables, mobile phone, internet, landline.

Heat, Light, Electric (TAX man will only normally tolerate around £400 for an average home office at your domestic residance).

Office fixtures and fittings (Desks, chairs, lights, extension leads) blinds, curtains, any repairs.

On the flying side you can claim, books, pens, flight bag, High vis jackets, headsets, handheld radios, computer desktop for self briefing, Printers for producing Invoices and statements, Pen Sticks (Backup of course) jep chatrs, maps...
Medicals, eyesight examination, Costs / Fees for recurrancy checks etc.
Insurances.

You get the idea and with a bit of luck, the TAX man will end up paying you...

[DFC]

Fuel, car repairs, MOT's TAX, Insurance


Be carefull with what expenses you attribute as being essential business expenditure.

The whole area of using the "company car" for personal use, fuel purchase etc etc gets the tax man's attention very quickly and is a pain in the proverbial to work out.

Unless you actually have a separate vehicle that is only used for business then it is far less painfull to simply pay yourself the mileage rate laid down by HMRC.

You can of course claim that the business owns your headset and every other bit of flying equipment you have. However, most of these things count then as assets of the business and you can not go out today and spend 5000 on office furniture and include the full 5000 in the current year tax return as an expense.

More important though is that if you over time write off the cost of the office furniture then sell it in the local free adds in 5 years time, the money you sold the desk for has to be included in the accounts and is taxable.

If you are going to try those kind of tricks then I would say yes get an accountant.

Regards,

DFC

[FlyingGasMain]

To be honest, I think I'm going to keep it all pretty simple.

I've got the invoices I submitted over the 4 months. I paid some NICs during that time. As far as expenses go I'll just claim for medical, a headset repair I had done and some shirts. If the expenses are low scale like this you can lump them all into the same box on the tax form.

Luckily I put a little bit aside for income tax whilst I was doing the flying, so fingers crossed I should have whatever they think I owe them covered anyway. How much can they tax me on peanuts in any case ?! ;)

[theavionicsbloke]

The whole area of using the "company car" for personal use, fuel purchase etc etc gets the tax man's attention very quickly and is a pain in the proverbial to work out.


Yes, thank you for pointing this out. Very true and good advice here.

I failed to qualify this with the fact that I log all my business travel.
Date, Time distance, client / task including vehicle displayed mileage pre / post trip etc. I also diaries all my business activity as amatter of course as any person should do.

On the 6th April I check the total mileage displayed on the vehicle and record it in the diary. I then compare this against the mileage recorded the year before and calculate the total mileage put on the vehicle for the year. The I compare this with the total logged bisuiness mileage. From this I then calculated the % Business / Private use. For me this varies between 50 to 70%. I then only claim only the actual true business % of the total cost (One that can be genuinely demonstrated and justify).

[DFC]

For me this varies between 50 to 70%. I then only claim only the actual true business % of the total cost (One that can be genuinely demonstrated and justify).

How does that compare with paying yourself mileage at the HMRC rates?

Regards,

DFC