Self Employed Cleaner? Here is our tax advice guide just for you. Whether you are starting out or just want to understand more about allowable expenses, here are some useful tips specifically for self employed cleaners.
Register with HMRC as a Self Employed Cleaner
Whether you plan to clean offices, houses or apartments, going self employed is the easiest way to kick start your career as a self employed cleaner.
First of all you must let HMRC know that you are self employed and you can do that online here. Once this process is completed HMRC will send you a UTR number (Unique Tax Payers Reference). Keep this safe as you will need this code to file your Self Assessment Tax Return.
As you are self employed you are required to pay tax under Self Assessment which means you need to submit a personal Tax Return by 31 January each year detailing your trading income, the income tax and Class 2 & Class 4 National Insurance due as well as making a payment for the tax and NI due. Your tax return submitted by 31 January covers the previous tax year for example: your tax return due on 31 January 2018 details your trading income earned between 6 April 2016 to 5 April 2017.
Watch out, you are also required to make a payment on account to HMRC by 31 July each year too which is normally 50% of your previous years tax bill, so make sure you budget for this additional payment too.
Your trading income, somewhat deceivingly, actually means your trading profits (all your income less all your allowable business expenses). Generally speaking, business expenses are only tax allowable if they are ‘wholly, necessarily and exclusively’ incurred in the performance of your business. All expenses must be supported by a receipt, so make sure you keep hold of all your paper or emailed receipts. But it is really important to be aware of which expenses are allowable because they will reduce your tax bill and incorrect claims can result in penalties.
Allowable Expenses for Self Employed Cleaners
Once you have begun finding work you will being to incur expenses on an ongoing basis as part of your cleaning. Here are some of the ongoing expenses you which you should look out for as a self employed cleaner and keep details of as they are generally tax allowable and reduce your tax bill:
If you are not provided with cleaning products and need to buy your own, then keep hold of all your receipts as and when you buy things so you can pass them onto your accountant at tax time and claim for them as an expense to reduce your tax bill.
The cost of a business phone (mobile and/or landline) is an allowable expense however if there is personal use then only a portion of the contract costs can be claimed.
You will incur the cost of travel as your travel to peoples homes or business premises. Keep hold of your receipts for trains, tubes or taxis as they should all be allowable expenses and help reduce your tax bill.
If you need to use your car to travel to your places of work then you should note down the mileage as this falls under the category of travel. Record you miles to and from your destination since you can claim 45p for the first 10,000 miles of driving and 25p thereafter.
If you choose to wear a branded uniform or apron for your work then you should be able to claim for the cost of this. Normal clothing is not allowed and neither is the cost of washing your clothes at home. You can however also claim for the cost of any protective wear in full, such as latex gloves.
Any marketing you do (online or offline), paid ads or anyone you pay to help you with your marketing is also fully allowable so make sure you download or ask your marketing assistant to send you an invoice before you pay them.
Accounting & Bookkeeping
Keeping accurate business records will help to avoid missing any entitlements or tax relief that you may be eligible for. Using a cloud based accounting software such as Xero, Quickbooks or Sage will make life easier, so if you do choose to sign up the cost of the monthly subscription is fully tax allowable. Then, if you choose to use an accountant to complete your self assessment tax return again their fees will be an allowable expense. Keeping accurate records will definitely help keep their fees down too as well as giving them all the information they need to make sure you receive all the deductions and reliefs to reduce your tax liability.
It is advisable to open a business bank account and keep your business and personal expenditure separate. The bank charges you pay on your business bank account is an allowable expense.
RECORDING YOUR BUSINESS TRANSACTIONS
It is likely you may be paid via bank transfer or cash and, like any self employed sole trader, it’s important to keep accurate business activity records and be aware of any entitlements or tax relief that you may be eligible for. Doing so will make life easier when the time comes to completing Self Assessment. Incomplete or inaccurate records will demand more time and hike up any accounting costs. Don’t forget that failure to declare all forms of income could result in prosecution and a fine from HMRC. Accurate returns are important as they affect a person’s eligibility and ability to get things like mortgages and other types of credit finance.
A simple spreadsheet which records your income and expenses is a great start to keeping your business transactions logged and organised. You read some of our tips to keeping your accounts organised here.
You must keep your records and receipts for at least 5 years after the 31 January submission deadline of the relevant tax year. For Example: If you sent your 2016 to 2017 tax return online by 31 January 2018, you must keep your records until at least the end of January 2023.
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