Self-employed daily food allowance

What do you mean by self-employment?

Self-employment is a situation where in which an individual is working for himself rather than working for an employer against monthly salary or wage and although various agencies see and define self-employment in their own way, generally self-employed people includes sole traders, contractors, director of a limited company or those having partnership in the businesses and this term is often

misunderstood as being a business owner, both are different situation, where in the former one, the person is working and involved in day-to-day operations of the company whereas in the later case, he is the person who owns the business but does not work and involved in the day-to-day company operations. As per 2016 statistics, there are approximately 14 million self-employed workers in the United Kingdom and UK law allows them to work as a sole trader or as a partner in a limited liability partnership, but not through an incorporated or unlimited liability company and thus there are various types of self-employment such as:

• Independent contractors: Independent contractors are a type of businesses or individuals who are hired to deliver specific jobs or services and get paid in accordance with the service they have delivered. Since the independent contractors are not counted as employees of the company they have delivered their services to, UK law refrains from both claiming and receiving employment benefits. Examples of independent contractors include advocates, doctors, lawyers, accountants etc.
• Sole-traders or proprietors: Sole proprietors are people who own and run unincorporated businesses and in case of partnerships, it involves at least two or more people and often hires a small number of employees in order to run day to day operations.

The reason why most of the young generation is taking self-employment route is because of its numerous advantages, such as:

• Own working hours: The first and foremost advantage which a self-employed person has over his traditional counterparts is freedom to choose your own working hours and you can decide when you want to work.
• Work where you like: Being self-employed gives you the freedom to work from your bedroom in your nightwear and even if your business demands for a location, you can choose to choose your own location.
• Tax advantages: The UK government in order to promote self-employment offers various tax advantages.
• Control over your income: Being a self-employed person you yourself decide your remuneration and have direct control over profits and also act as a motivation to work harder in order to increase your income. Also it takes out the opportunity to crib about getting less paid.
• Choose the people you work with: Self-employment gives you a wonderful opportunity to select the people you want to work with and thus saves you from getting stuck with frustrating coworkers.
• Your passion is your work: And most importantly, you are working what you love.

Being self-employed means taking on risks and costs that you don’t have when you are working for someone else and it allows you to have certain allowable expenses such as:

• Accommodation: If you have rented out a space to conduct your business, the UK government allows you to deduct the amount you pay for its rent. Along with the rent you pay for the space, you can also deduct the cost of equipment you have hired, if any.
• Travel costs: Travel costs including hiring of vans or cabs including train, bus, and plane or taxi costs as a part of your travel costs and is an allowable expense. Travel costs for the self-employed are a bit different from those who are operating through a limited company.
• Health insurance premiums: You can deduct your health insurance premiums as a part of expenses and can be claimed.
• Publications and Subscriptions: If you have subscribed for specialised magazines, journals and books directly related to your business, and then the cost related to it can easily be claimed. For example, as a restaurant owner, if you have subscribed for a daily newspaper then it is not sufficient enough to be considered a business expense, however, if you have subscribed to “Nation’s Restaurant News” in order to understand and give a boost to your business, then you can claim its cost and it comes as a deductible and allowable expense.
• Interest: Any interest on a business loan from a bank is an allowable expense and thus a tax-deductible business expense. However you have to make sure that credit card purchases and applicable interest are not tax-deductible.
• Meals: Food allowance for self-employed was not allowed earlier because HMRC was of the view that everyone must eat in order to live and thus it was not an allowable expense but later on this was abolished and now you can easily claim your food allowance too.