It may not be the most glamorous side of the business, but tax is extremely important and all self-employed individuals need to know their stuff. I encounter many freelance hauliers who are unclear about the allowances and expenses they can claim for their business. This is a shame, as it could be having a negative impact on their profitability. |
Therefore, it is worth taking a look at what may be allowed as a claim when it comes to filling in that pesky tax return each year. Read on if you are a self-employed courier seeking guidance.
As with any freelancer in any industry, good record-keeping is vital. This enables you to precisely calculate your profit/loss and you will also have evidence if HM Revenue and Customs (HMRC) requests it. You should keep records of all sales and income, all expenses related to the company, VAT records and PAYE records (if you employ others).
You should also have a filing system that contains receipts for goods and stock, bank statements, sales invoices, till rolls and bank slips. The best and most efficient way to do this is to record your income and expenses at the end of each day in a spreadsheet.
It is common for self-employed individuals to hire a tax accountant to take care of this side of the business, which is certainly worth considering. Keeping accurate records and filling in an annual tax return can be stressful and time-consuming (particularly when you have to focus on other areas of your organisation). Whether you use the services of an accountant or not, you should always keep records and understand the importance of doing so.
It is also crucial that you are aware of entitlements in regards to running a profitable courier business. As a self-employed worker, you can claim tax-allowable benefits. For hauliers, this could include the following:
- Fuel costs - Repairs and servicing costs - Annual road tax and MOT test - Vehicle washing - Interest on loans taken out to purchase the vehicle - License and registration fees - Running cost of office (electricity, internet etc.) - Vehicle insurance - AA/RAC membership - Radio hire - Accountancy fees - Advertising - Parking and toll fees - Phone use
In addition to this, capital allowances can be claimed for the cost of your lorry and other assets. This could be between 18% and 100%, depending on the vehicle.
Disclaimer: This is for informational purposes only and an expert tax accountant should be consulted to see what is allowable as a claim.
Calculating the vehicle running costs can be tricky (particularly if you also use it for personal use), which is why many freelance hauliers use HMRC’s Fixed Scale Mileage Rate. This is an alternative method where you are able to claim 45p per mile for the first 10,000 and 25p thereafter.
Being a self-employed courier can be rewarding, but it can also be stressful. A lot of stress is attributed to keeping records and filling in your tax return, but it is also vital that you are aware of your entitlements as a freelance worker.
Norman Dulwich is a correspondent for Courier Exchange, the world's largest neutral trading hub for same day courier jobs in the express freight exchange industry. Over 4,000 transport exchange businesses are networked together through their website, trading jobs and capacity in a safe 'wholesale' environment.
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