Keeping Expenses Down and Revenues Up

Taking that first step from being employed by a logistics company to becoming a self-employed courier can be a daunting one. You are leaving the relative security of a regular job with a wage, pension and fringe benefits for a highly competitive world where you’ll be forced to search for self-employed courier jobs not only to support yourself and your family, but just to cover your costs and expenses.

The Taxman Is On Your Side

Even though we all complain about paying taxes, if you perform self-employed courier jobs then the tax department will recognise many of your day to day expenses, running costs and even long term investments as being tax deductible. When you total up your revenue, you deduct your allowable expenses and the actual income to be taxed will be your total income less your business expenses.

For example, if you’re total income is £48,000 and your tax deductible expenses total £12,000 – then you only pay tax on the difference - £36,000.

Please note that personal expenses aren’t tax deductible.
Which Business Costs Are Tax Deductible?

There are eight categories of deductible expenses. Not all may apply to you as a self-employed courier. Jobs, however, will be more profitable if you are aware of them and take advantage of them to maximise your deductible expenses:

1. Office Costs.
2. Travel costs.
3. Clothing expenses.
4. Staff costs.
5. Commodities you buy to sell.
6. Financial expenses.
7. Business premises and associated costs.
8. Advertising.

Then there are what are known as Capital Allowances. These includes equipment (assets) that you purchase for your courier business such as maintenance equipment, vans, lorries etc. These are an annual deduction of part of the purchase cost (Annual Investment Allowance).

For the purpose of this article, we shall be taking a closer look at Office and Travel costs and will also touch on Financial expenses and Advertising.

Office Equipment and Supplies

Office expenses include:

• Stationery.
• Phone, mobile, fax and internet costs.
• Postage.
• Printing costs
• Printer ink.
• Computer software and applications. NOTE that if you use the software for more than two years it must be claimed as a Capital Allowance. This does not apply to the renewal of software licenses.

Rents, Property Tax, Power, Insurance

This category includes:

• Business premise rental.
• Business rates.
• Utility costs (electricity, gas, water etc.).
• Property insurance.
• Security

Business Premises

Includes:

• The cost of buying or building a business premise or of significant alterations is claimable as a Capital Allowance not as expenses.
• Repairs and equipment maintenance can be claimed as expenses.
When Your Office is Your Home
If your office is in your home, or some of your business equipment is also for personal use, you are entitled to claim for that proportion of your home or equipment used for business purposes. For example, if you use a mobile phone for both personal and business use, you can only claim costs associated with business usage as tax deductible. In a similar vein, you can claim expenses such as electricity, property tax, internet, rent etc. in proportion to the number of rooms used for your business in the home.

Car, Van and Travel Expenses

Perhaps the biggest expenses for those who are looking for self-employed courier jobs are those surrounding your vehicle (other than its purchase which may be claimable as a Capital Asset).

If you own a car, then you already know how expensive it can be, even before you’ve driven a single mile. For the van or truck you use to perform your self-employed courier jobs you face the same costs but even higher.

Don’t forget that the vehicle itself, the breakdown and load insurances, licencing fees, MOT, repairs and servicing, fuel costs, parking charges, hotel costs if you’re on a long haul and can’t sleep in the cabin, meals and more are allowable as business expenses.

Financial Charges

To run your haulage business, you will need to use a range of financial services. Many are tax deductible. These include:

• Accountants, solicitors or other business related professionals.
• Legal fees (excluding fines incurred from traffic offences or any other legal infringements).
• Bank charges (including credit cards).
• Interest on business loans.
• Hire purchase interest.
• Leasing costs.

Bad Debts

Hopefully you’ll never have to deal with a customer who doesn’t pay. However, should this happen the “tax man” has a mechanism that allows some of them to be classified as tax deductible expenses. However, this doesn’t apply to all bad debts, only those whose totals are included in your turnover and for which you are certain to never receive payment.

Marketing

Marketing is an essential part of drumming up self-employed courier jobs. If you advertise in newspapers or electronic media, use mail-shots, set up a website – all of these are claimable. You can also claim for professional journals and membership in professional organisations such as the Freight Transport Association (FTA).

The Bottom Line

Now you know what items and services you can claim for. But how do you make your claim?

The “Golden Rule” is to keep accurate and up to date records of all your expenses. Get receipts and tax invoices for everything you pay for. If you can’t prove you paid for it – it could cause you problems further down the line.

Place the total amount of your expenses into your Self-Assessment Tax Return (this must be filled in after the end of the tax year which falls on April 5th) and submitted no later than the following 31st January.

Please be aware that you do not need to provide proof for any of your expenses when filing your return. However, HM Revenue and Customs (HMRC) could demand to see receipts, invoices etc. if they decide to check your return.