Freelancer’s
Question:
I am a freelance photographer who's
looking to purchase some equipment. What is the best way to go about this, in
terms of tax efficiency? Should I be paying for it through my business account or through my personal
account after paying myself wages? I am new to freelancing and would really
appreciate some advice on this.
Expert’s Answer: In terms of tax efficiency there will be no
difference whether you pay for the expenditure through your business or
personal account. However, as you have already set up a business account you
may want to use this account for your business purchases, such as the
photography kit, as it will make your bookkeeping less complex. Remember, you
must keep receipts for all purchases. Equipment, such as cameras, is a capital
allowance and will reduce your tax liability. Less expensive consumables such
as batteries, DVDs or bulbs, will be classed as revenue expenditure and will
also reduce your tax liability.
The expert was Alasdair McGill, managing director of Freelance World, a tax and compliance advisor for freelancers.
Aug 2, 2010
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