To help you manage your finances and ensure you save enough money for your tax, Coconut have offered some advice to ensure you are covered.
Last week, we invited our dear friend Coconut, experts in self-employment to host a more-than-useful webinar with us, on how to master the art of saving money for your tax and keeping track of your expenses when you work for yourself.
Have a read of the key learnings from the event and the best advice from the team at Coconut.
Keep on top of your finances
James, Lead Accountant at Coconut, couldn't repeat that enough: when you work for yourself, you need to keep track of your finances.
- Your income: how much do you earn monthly/weekly as a freelancer ?
- Your expenses: how much do you spend for your business?
As James explains, business expenses can include transport, phone bills, lunch and training (we'll talk about this later on).
Anything you need to pay/buy to run your business is considered a business expense.
- Your savings: How much to put aside every month or week?
💡Put aside at least 20% of your income every month (or 5% weekly if you prefer) to make sure you can pay your taxes at the end of the tax year.
One of the biggest challenges you could face when being freelance is not saving enough and not keeping track of your profit and expenses. So, wait to begin putting money aside.
Get a tool that helps you to do all of this
If you're not a spreadsheet master and would prefer to use a tool to keep track of your finances, there are many tools available on the market.
These tools are called "bookkeeping" or "tax" applications. They help sole-traders and/or limited companies to keep on top of their finances.
You can either use Coconut (and get the 3 first months free if you're a Talent using Brigad) or have a look online at the best solutions available for you and your business.
You can deduct expenses from tax
It is possible to deduct your business expenses when filling in your self-assessment and, therefore, lower the tax you pay. But how? Coconut has gathered all the expenses you can claim and made a great guide about it.
One question we do get very often is: can I deduct training and courses from my tax? Yes, you can.
Training tends to fall into two categories and each one is subject to different tax rules:
- Training courses to update and improve existing professional skills and expertise;
- Training courses that business owners and staff attend to learn new skills.
If you are self-employed, any training you do that keeps your existing skills and expertise up to date would be a tax allowable expense.
So for example, if you're a commis chef and would like to train to become a chef de partie or need to update your certifications, you'll be able to claim that back.
How to claim your tax deduction
You can claim tax relief when you fill in your self-assessment tax return. You’ll need to include it within the self-employment section of your return as a business expense.
As with any other business expense, always make sure you keep your receipt as evidence of your claim.
Want to know more?
You can ask the specific questions you have to James, Coconut's Lead Accountant at firstname.lastname@example.org