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Posted Sat, 08 Jul 2023 12:39:25 GMT by newluke16
Hi, I'm considering starting a new business in which I receive a fee/commission from a company (e.g. £20) if I arrange/refer a new customer to them. I would then share some of this with the customer so I take £20 from the company and forward £10 to the customer. The £10 is an marketing expense on my part and not profit, how would I label or keep record of this? Please note the above is just an example scenario and made up figures.
Posted Fri, 14 Jul 2023 11:55:05 GMT by HMRC Admin 20
Hi newluke16,

The initial payment is classed as part of your income and the money you then give to the customer would be miscellaneous expenses.

Thank you.
Posted Fri, 14 Jul 2023 15:21:20 GMT by newluke16
Just to clarify, I'll only pay income tax on the £10? As I would have received £20 from the company, but paid £10 to the third party/customer as agreed and classed as a miscellaneous expense. Thank you
Posted Sun, 16 Jul 2023 22:05:46 GMT by JungleJ
I am a self-employed music teacher, and teach from home in the afternoon and evening. I use the morning for lesson prep and other admin. I am considering subscribing to to use as a body double during this admin time to help me to stay focussed. I do not use for personal time. If I were employed then I would expect my employer to pay the subscription fee as a reasonable adjustment under the Equality Act. Therefore I assume that this would be an allowable business expense, but I can't see anything like this listed on your help pages. Would it be classed as "Wages, salaries and other staff costs", or perhaps "Other allowable business expenses"? Thanks.
Posted Thu, 20 Jul 2023 08:06:18 GMT by HMRC Admin 5
Hi newluke16

You would be taxed on what you are paid, minus your expenses. 

Thank you
Posted Thu, 20 Jul 2023 09:41:39 GMT by newluke16
My question is how would I record this expense, and as what? It's essentially a cashback/discount. Although at arms-length as the customer did not pay me directly. I'll keep a copy of the transaction cost via bank transfer along with the customers information.
Posted Fri, 21 Jul 2023 12:57:39 GMT by HMRC Admin 32

This could come under computer software, which would be declared under 'stationery'.  

Expenses if you're self-employed

You would also need to consider the 'wholly and exclusively', in the performance of your duties.  

BIM37400 - Wholly and exclusively: case law: incidental benefit

Thank you.
Posted Fri, 21 Jul 2023 13:53:29 GMT by newluke16
Did you respond to the wrong post, HMRC Admin 32?
Posted Thu, 27 Jul 2023 10:59:33 GMT by HMRC Admin 25
Hi newluke16,
"BIM1100210 advises "
A cash-back received in the course of trading is a receipt of the trade to be included in taxable trade profits"".
You would include this in the gross turnover"
BIM100210 - Miscellaneous income: particular sources: cash-backs
Thank you. 
Posted Thu, 27 Jul 2023 14:02:47 GMT by Catherine Newman
I am in practice. In both these cases you put them under "Phone, fax, stationery and other office costs. New Luke-it is not a cash back. It is commission.
Posted Mon, 31 Jul 2023 10:26:00 GMT by HMRC Admin 19
Hi newluke16,

That is the correct answer.  

You would declare the full commision on the self employment section of your tax return as part of your gross turnover and claim expenses for the payment made to the new client.

Thank you.

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