When you're working out your earnings for tax purposes, what type of thing do you put down for expenses? What's reasonable? I get the feeling I should have more expenses....

I put down everything which has to do with the instruments I am teaching and the room in which I teach them - stationery, piano tuning, music equipment (like stands, tuner, metronome), music for my reference (things like exam books, which I wouldn't need for my own use but do need as a teacher), heating, lighting, phone calls, the occasional cost of redecorating/upgrading the music room, the cost of courses and seminars I go on, travel expenses to those, subscriptions to music organisations, and the expenses I incur when organising students' concerts. I can't think of anything else at the moment!

Jo's +

a percentage of water and council tax (% worked out from number of room in house), accountant fee, percentage of car/motorbike costs, postage, insurance, examination entries, advertising, website hosting, % of broadband costs and bank charges. Having a business account is a must for me. Items like an Edirol R-09 too!

Great! I've got a few ideas already that I hadn't thought of! How important is it to have receipts?

NEVER charge for council tax - even as a percentage. If you do, the taxman can reasonnably claim capital gains tax on the percentage of the property on resale that you have claimed as an allowable expense. Likewise, redecorating should only be claimed on that undertaken OVER AND ABOVE normal decorating - e.g. for excess wear and tear. It is, after all, part of your house and would be decorated anyway.
If you don't claim vehicle costs (purchase interest/write down allowance/tax/insurance/repairs, etc.) because you travel to the same place to work every day, or like me, teach from home, your claim can be 40p per mile for business use.



You should have receipts for everything, otherwise the taxman could disallow it.

Is it simply a matter of disallowing it, though, or can we be fined for not being able to find receipts? (I'd risk the former.)

I never knew that. I just give all the figures to my accountant and he works his magic.

Yes, well, disallowing it can lead to you having to pay interest on the amount of tax underpaid at the very least, or in extreme cases being prosecuted for misrepresentation. I might occasionally put through an expense if I have proof of paying the money, e.g. a credit card receipt. But it's rare.
You may never get an enquiry about your tax return, so the occasion may never arise. Personally, I prefer to sleep at night, knowing that if I do get an enquiry, I can prove my expenses.




You might find then, that he is not claiming it. Coincidentally, I spoke to a piano teacher friend at the weekend about this very thing, and his accountant also gives him the same advice.

Me too! I don't have an accountant, but it seemed easy to do it online myself last year - which worries me that I must be doing something wrong

I keep receipts in a sweetie jar....

I stuff them into my purse and then mindlessly clear out my purse at a later date.....

[quote name='Dulciana' post='575541' date='Aug 21 2007, 09:07 AM']
Great! I've got a few ideas already that I hadn't thought of! How important is it to have receipts?
[/quote]

You should have receipts for everything, otherwise the taxman could disallow it.
[/quote]


You're SO right - it's so important to keep all reciepts. Speaking from experience here - and not a good one!!

THIS HAS BEEN A GREAT HELP FOR ME AS I AM ABOUT TO START MINE THIS WEEK....FOR THE FIRST TIME...ANY MORE TIPS GREATLY APPRECIATED.

That makes me feel better about the shelf I call my "office"

.

remember for mileage, just a contemporary record in your diary is OK. Same is true for an occasional postage stamp.