Tax Allowances for Self-Employed
For self-employed persons, they have several tax reliefs and allowances which are granted by the Revenue and Customs to them.
Here are some ideas about those tax allowances that you might get as a self employed tax payer.
What is Tax Allowance?
Tax allowance is the relief being granted to tax payers. They have different forms of this tax allowances and reliefs depending on the kind of tax payer. The sole reason of the Revenue and Customs on giving off these reliefs and allowances is to try to encourage tax payers to pay their taxes on time and honestly.
Benefits from Tax Allowances
By paying your taxes, you also get something in return as a self employed tax payer. Here are some of them:
- Professional Expenses
By having your own business, you may claim for the professional fees. When we say professional fees, we mean those fees that you have spent when you hired the professional services of a lawyers and accountants. More often than not, tax payers are not aware of these claims, which they can get when they file for tax returns.
- Motoring Expenses
Self employed people would usually use their own cars in going to their jobs or using it for the purpose of their businesses. If this is the case, you can definitely claim the cost that you have incurred by doing this but you should comply first with the two criteria. First is to use the fixed rate given by the Revenue and Customs and second use the actual expenses you have incurred in doing this.
- Maternity Benefits
For women, if they are self employed they would usually set their office at home for they are also busy taking care of their family. They as self employed tax payer, they are granted with state maternity allowance that goes up to 18 weeks. They have the option to take this allowance either before or after they have their baby so long as they invoice that period.
- Tax Savings
Almost everyone wants to look for ways on how to reduce their taxes. It is already a given fact that each of us has different tax situations. This depends on the bracket. There are two kinds of tax savings for the self employed tax payer:
- Reduced and Adjusted Gross Income
To reduce your adjusted gross income, you have to contribute to an IRA. If it so happen that you are single, the contributions you give to IRA is deductible to the extent of $4000. But if you are already 50 years old by the end of the year, your contribution is deductible up to $5000.
Since a self employed tax payer is bound to pay too many expenses which are covered by the employers, there are some special deductions being given to them together with some tax savings. To do this, here is an example. If you are doing your business using a computer, then you can use this to deduct as business expense.
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