Which expenses can you claim if you’re self-employed in Ireland?

Roughly 14.75% of the Irish workforce is self-employed.

Being self-employed means you conduct your own business rather than work for an employer. If you are self-employed in Ireland, there are some expenses you can claim to help support the cost of running your own business.

However, the process of claiming expenses can lead to some confusion on what exactly can be claimed for tax purposes and the difference between allowable and disallowable expenses. Workers can also mistake their own personal expenses which are non-claimable.

In this guide, we will help you understand allowable and disallowable expenses you can and cannot claim.

And remember, if you are self-employed in Ireland, you must file a self-assessed tax return. The deadline for submission of paper tax returns is October 31. If you wish to pay and file online, you must do so by mid-November.

If any of the following apply to you, you must file an Irish tax return:

· You are self-employed

· You’re a director of a company

· You’re a contractor or sub-contractor

· You’re a landlord or accommodate Airbnb in Ireland

· You receive more income as well as PAYE e.g. rental income, consulting, capital gains

· You’re apart of an employee share scheme

· Some PAYE workers have to file an Irish tax return

Keeping track of your expenses

If you are self-employed, you must keep certain business records for tax purposes. It is a good idea to keep your expenses organised.

Make sure you keep business expenses separate from your personal expenses so you can work out what relates to your business.

Your records can be used to confirm information contained in your tax returns and they should clearly show the accounting process. Revenue can ask for proof of records and receipts.

Methods for keeping track of expenses:

· Cashbooks

· Invoices

· Mileage records

· Bank statements

· Receipts for purchases

Allowable Expenses

Allowable business expenses can be used to help reduce your overall tax bill.

For an expense to be regarded as allowable for tax purposes, the expense must be directly related to the running of the business. Doubt can occur around items such as mobile phones and cars as people will hold these for their own personal use also.

As expenses vary with the nature and extent of self-employment, there is no complete list of all allowable business expenses.

It is important to note you cannot deduct costs which you incur for a non-business purpose such as your own personal expenses.

Wear & Tear

An annual wear and tear allowance of 12.5% of the cost, over 5 years is available. It can be claimed for capital expenditure incurred on plant and machinery. It is calculated on the net cost of the asset to the trader.

For a trader to claim capital allowances on expenditure incurred on an asset:

· They must have incurred the expenditure for the purpose of the trade

· The asset must be used exclusively for the purpose of trade

· The asset must be in use at the end of the accounting period

Equipment

Any equipment used directly in relation to the running of the business is an allowable expense and can be reclaimable.

However, a reason for purchase and details of use will be required. Assets like computers will be thoroughly examined to ensure that it is being directly used for business purposes.

Motoring expenses

If you own a car you use for both business and personal purposes, you are entitled to claim back a percentage. This percentage is made up of the actual running costs e.g. fuel, servicing, repairs relating to the business use.

All motor expenses are allowable deduction against individual’s self-employed income e.g. fuel, motor tax, insurance etc. Workers can claim back on toll charges — however, you will need to provide receipts and other documents of paid fees. Note, personal use is non-claimable.

Professional services

If you require services from a financial agent e.g. an accountant to manage your accounts or help you file your tax return, you can include this in the costs on your list of allowable expenses.

You can also claim tax relief if you require the service of business consultants, legal agents, training providers and marketing services etc.

Finance lease payments for machines or vehicles that you use in your business

You can claim the full lease payment for machines or vehicles that you use in your business.

The following are the main day-to-day allowable expenses in most cases:

· Materials

· Wages & Rent

· Accountancy fees

· Motor running costs

· Depreciation of machinery or equipment

· Insurance relating to the business

· Telephone

· Lighting and heating (for business and not domestic use)

· Advertising

· Bank charges

· Stationery

· Van/Car leasing

Disallowed Expenses

Not every business expense qualifies for tax relief.

For example, you cannot claim any of the below on your end of year tax return:

Personal mileage expenses — mileage that is not directly to do with the business cannot be claimed

Food expenses — this is a basic need and living expense therefore is not related to business operations.

Clothing expenses — work clothes worn to work and normal clothes are non-claimable expenses.

Accommodation — Like food, shelter is a basic need therefore the cost of accommodation is non-reclaimable.

Staff entertainment — some expenses are deductible but must be validated

Client entertainment — this may be a business expense but for tax purposes it is not an allowable deduction. In most cases, the individual can be reimbursed on a tax free basis by their employer if they incur in a genuine business expense on networking/client entertainment, once the expenses are fully validated and reasonable. (Revenue has strict guidelines in place and must be adhered to.)

Not sure whether your expenses are deductible? Why not Taxback.com?

Key tax dates for your diary:

· The Irish tax year runs from Jan 1 — Dec 31

· 31st October is the deadline for submission of a self-assessed tax return

· Mid November is the extended deadline for people who pay and file online

Who can help me with my Irish self-assessed tax return?

You can, of course, file your end of year tax return directly yourself with Revenue.

The main advantage of filing yourself is that it is free.

However, the burden of managing the tricky tax paperwork, claiming the correct expenses and ensuring that you are tax compliant with Revenue will lie solely with you.

If you’d like a hand with your tax return, why not file with Taxback.com?

You will enjoy a simple online process while our team manages all of the tax forms for you.

We will ensure you claim every tax expense and relief you’re entitled to, minimizing your end-of-year tax bill.

To get started, simply complete the short form here.

Why file with Taxback.com?

· Simple online process — no complicated forms

· Your personal account manager will guide you through the process

· 100% Revenue compliance guaranteed

· You will claim every tax relief you’re entitled to

· 24/7 Live Chat support