Tips on tax deductible expenses - from Sherlock!
Updated 24 June 2019
Is Sherlock Holmes’s hat tax-deductible? Does Mary Poppins claim for professional indemnity insurance? The tax returns of fiction’s greatest heroes and villains have been a closed book – until now! We bring you the most page-turning guide to self-employed expenses you’ll ever read. Article by Nick Green.
Despite being great writers, there were some details that Arthur Conan Doyle, P L Travers and J M Barrie missed out when describing their famous characters. Generations of children and their parents have been left in the dark as to how these characters – all of them self-employed – dealt with their annual tax return. But if that’s the sort of mystery that keeps you awake at night, then worry no more.
Running your own business in a story is no different from running one in real life – you should always keep track of your tax-deductible expenses, to reduce your overall tax bill. Here’s our best guess at the expenses that might have been claimed by three well-loved characters.
How would the world’s greatest detective deal with this taxing problem? Holmes of course lives at 221B Baker Street, which is also his office, so he can claim home working expenses including utility bills, telephone, Council Tax and the rent he has to pay to Mrs Hudson. (If he is the modern Sherlock, he can claim for the internet too). Working from Holmes, indeed.
However, he can only claim for the part of his home that he uses as a workspace. So he must divide his total costs either by the number of rooms he uses, or by the amount of time he works there. This tricky calculation is elementary for him, but others in a similar position may prefer to claim simplified expenses.
Holmes gets through countless notebooks, so he also claims stationery costs such as for paper and ink. And being under constant threat of assassination by his enemies, he invests in extra security for his office, for which he can also claim.
As well as leaping to deductions, Holmes is also always leaping into hansom cabs to pursue leads. This runs up a huge weekly travel bill, but he can claim this as a work-related expense. And if while pursuing a case he has to stay overnight in a hotel, he can leap to this tax-deduction too.
As a consulting detective, Holmes wears no official uniform, so cannot claim clothing expenses for his cape and deerstalker. However, he is also a master of disguise, and given that actors and entertainers can claim for their costumes, it’s reasonable to conclude that Holmes would do so for his incognito wardrobe.
Sometimes, when Holmes solves a case, his client is too poor to pay up. Fortunately, if he uses the traditional accounting method, he can write off these bad debts and claim them as expenses.
Nothing escapes the beady eye of everyone’s favourite nanny, so when it comes to tax returns, Mary Poppins is sure to be supercalifragilisticexpialidocious. What can she claim for?
Mary travels by the east and west winds, so her trusty umbrella counts as her vehicle for tax purposes. She can claim for vehicle insurance on the brolly, repairs and servicing if the spokes suffer wind-damage, fuel (presumably magic dust is involved somewhere), breakdown cover and licence fees.
Furthermore, assuming Mary bought the umbrella specifically for her nannying business, she can claim the cost of it as a capital allowance. In order to do this, she makes sure not to simplify her expenses, because as a sole trader she finds it more convenient to use the cash-basis accounting method.
Her black coat and hat count as a professional uniform, so she can claim clothing expenses on these.
It’s a big responsibility to take charge of children all day, so Mary needs professional indemnity insurance, which she can claim for. And what with magical antics such as flying, riding carousel horses and dancing on rooftops, it’s a good thing she can also claim for public liability insurance.
Usually Mary Poppins can be summoned with a simple letter up the chimney. However, if she does choose to advertise her services either via the press, directories or bulk mailshots, she can claim this as an expense too. It’s a spoonful of sugar to help the tax return go down.
Peter Pan’s archenemy, the dread pirate Captain Hook wouldn’t pay any tax at all if he could help it. Luckily for him – since the Jolly Roger has a large crew – he can claim allowable business expenses for his men’s salaries, bonuses, and even their workplace pension and benefits if he decides to offer them any. Occasionally a skirmish with the Royal Navy will leave Hook short-handed, but if he needs to recruit more pirates then he can also claim on agency fees and subcontractors. His employer’s National Insurance payments are also tax-deductible.
The Jolly Roger itself is a rich source of tax efficiency. Firstly it is a vehicle, so is eligible for the same tax deductions as Mary Poppins’s umbrella (see above). Secondly, it is his workplace, so he can claim all the applicable expenses that Sherlock Holmes (see above) can claim on 221B Baker Street. The only downside is that he cannot claim for deprecation of equipment, so the gold he spends on scraping off barnacles is not a deductible expense.
Any cargo that Hook buys to trade (goods for resale) can be claimed against tax. However, being a pirate, he prefers just to steal it.
Finally, Captain Hook likes to keep up with trends in the marauding world, so he subscribes to both Pirating Weekly and Privateer’s Journal, and pays an annual membership to the International Pirate Association (IPA). Trade-related subscriptions and memberships like these are also claimable.
One final expense for which all three of these characters are eligible is the use of an accountant. To find your own (non-fictional) accountant, just use the tool below. They can tell you more about the expenses you could claim as a self-employed individual. If your business is in its early stages, then you may like to check out our Starting a Business guide.
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