Ensure that your expense claims all add up

BARRY KERNON, from accountancy firm HW Fisher, the SJA’s auditors, offers more insight about how freelance journalists can get their tax returns right

You might wonder why anyone would need an article about reimbursed expenses? It’s simple – you spend the money and claim it back from the newspaper and the transactions cancel each other out.

receiptsUnfortunately, things are not that simple.

Freelancers should be aware that reimbursed expenses constitute income for income tax purposes and also for VAT accounting. Journalists should include reimbursed expenses as part of their gross income on their tax returns and then claim the appropriate expenses as a deduction. If the expenses are treated as cancelled by the reimbursements, the income is understated and this can give rise to enquiries by HM Revenue & Customs, who will have received a declaration from newspapers which include fees, reimbursed expenses and, where applicable, VAT.

Additionally, not all reimbursed expenses will necessarily be tax deductible, client entertaining being a common example, and so there may also be a profit element.

For VAT purposes, reimbursed expenses constitute turnover and have to be added in when calculating whether you have exceeded the compulsory registration limit (currently £81,000) or the deregistration limit (currently £79,000). VAT should be charged on reimbursed expenses where the publication you are writing for is based in the UK.

Employed journalists do not have the same problems because the employer deals with the necessary accounting and there is rarely any taxable benefit arising from amounts reimbursed.

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