Managing Your Taxes as a Self-Employed Decorator

Here’s some tax advice for self-employed painters and decorators who want to:

Understand more about self-employment taxes;
Reduce their tax bill;
Learn more about tax-deductible expenses;
Know a bit more about bookkeeping.

How Taxes Work for Self-Employed Painters and Decorators

When you are self-employed you must pay:

Income tax
Class 2 national insurance
Class 4 national insurance

The amount of each of these that you pay, depends on how much profit you make.

Profit means all your business income less all your business expenses.

Tax-Deductible Expenses for Self-Employed Painters and Decorators

The easiest way to reduce your tax bill when you’re self-employed is to make sure that you claim all the expenses you can.

Here are some typical tax-deductible expenses for Painters and Decorators:

Tools and equipment, like brushes, trays and ladders;
Paints;
Cleaning fluids;
Protective equipment;
Branded clothing;
Certain travel costs;
Mileage if you use your own car;
Training courses;
Some food;
Insurance;
Accountants fees;
Bank charges for a business bank account.

There are some costs that you cannot claim for, even though they may be a result of being a self-employed painter and decorator.

This includes things like:

Travel between work and your base of work;
Training for new skills;
Personal clothing;
Parking fines;
Lunches;
HMRC interest and penalties.

Allowances and Reliefs for Self-Employed Painters and Decorators

In addition to tax deductible expenses, there are other reliefs and allowances you are entitled to when you are self-employed that will reduce your tax bill.

Here are some of the common allowances and reliefs you should check whether you are entitled to:

Personal allowance which is the tax-free amount everyone is entitled to earn;
First-year allowances on tools and equipment;
Marriage allowance.

Self-Assessment Tax Return

You need to declare all your earnings from your decorating business, as well as any other forms of income you have on a self-assessment tax return.

This is the official form required by HMRC and it’s due by 31 January each year. The penalties for missing this deadline start at £100.

A self-assessment tax return contains:

Your personal details;
A summary of all your income not just as a self-employed painter and decorator (like bank interest, employment income and rental income);
Details of allowable expenses you wish to claim against your taxes;
A tax calculation;
How much tax you need to pay.

One tax return form covers one tax year.

A tax year runs from 6 April to 5 April.

So a tax return for 2018/2019 covers earnings from 6 April 2018 to 5 April 2019 and needs to be filed by 31 January 2020.

When is Your Tax Due?

Any tax you need to pay is due by 31 January, along with your self-assessment tax return.

Payments on Account

In addition to your tax payment, you may need to make a contribution of 50% towards your next year tax bill.

This is called a payment on account and can come as a shock to some self-employed people.

Bookkeeping and Record-Keeping When You’re Self-Employed

One of the keys to reducing your tax bill is to stay on top of your bookkeeping and tacking all your expenses.

You’ll also need to make sure you keep all your receipts support all the expenses you want to claim, as well as details of what you have been paid.

The simplest way to do this is to:

Open up a separate bank account for yourself and set this to send/receive any payments. That way when tax time comes you has a record of everything that has happened.
Save all your receipts and reports using a bookkeeping app.

Quickbooks is a great option for self-employed painters and decorators since you can photograph and store your expenses on the go, as well as using the app to automatically track your business mileage.

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