Filing one’s tax forms are a necessary chore for many people, but for more people, they are a way of reducing the money that they owe the state. It depends on which country you come from. In some countries, people pay no tax until the end of the tax year, in others, workers pay a fixed rate, say 25%, of everything they earn, but settle up with the state at the end of the tax year.
They settle up by submitting their tax returns, which basically means claiming tax relief for expenses that they have incurred in the completion of their work. It is the difference between what an employed person earns using the boss’ tools and a self-employed person earns using their own equipment. After all, a boss would claim for every shovel that employees use, so why should a self-employed person have to pay for his own shovel?
The same is true of owner operator truck drivers. So what are the sort of expenses that an owner operator truck driver can claim for?
First and foremost is the reduction in the value of the truck itself. The rate at which this is permitted differs from country to country, but in many it is 25% of the value of that truck per year, based on the cost price. You will also be able to deduct 100% of the interest charges on the loan that you took out to buy the truck.
This can get quite tricky if you want to sell the vehicle before it can be called ‘written off’ in the eyes of the law. However, whatever you get for the vehicle has to be considered as income after the truck has been written off.
You will have to take advice on this topic because it is very complicated, varying from country to country. The main point is that you are not allowed to deduct the full payments for the truck, only the interest.
Another major fee that drivers can claim back are toll charges. If you have to pay anything to stay on the road, you are allowed to off-set that against your earnings. The same goes for cleaning, washing and maintaining the vehicle, but you must keep all the bills.
No tax man will believe you without them. Meals and over-night lodgings are also tax-deductible, but again, receipts are an total essential.
Many people reckon that they can claim for clothing, but this is a difficult point. You are only allowed to claim for working clothing that can only be utilized wholly and exclusively for work. Overalls are a good case in point, as are steel toe-capped boots or wellingtons. A sleeping bag is ambiguous.
Fines or traffic tickets are not deductible, because they were your responsibility. Likewise solicitors’ fees combatting them – unless you win. However, if you fight and lose, you may incur penalties from the tax office. Sometimes it is easier, and cheaper, to just pay up, unless it endangers your driving license.
Fuel bills are a large part of most drivers’ expenses, so it vital to keep a close eye on those receipts. It is a good idea to pay for fuel with a fuel card because then you have a permanent, re-recoverable record of them.
Mobile phones, sat nav and laptops are necessary to many drivers, but governments take a particular view on them. Some allow 100% deduction, others allow only 25-50%, because they assert that they can be used for purposes non-essential to carrying out your occupation. Calls on the cell phone may have to be justified for similar motives.
You may get away with claiming for air-con and even a fridge to keep your food cool or a special ergonomic seat for your back, but do not rely on it.
In general, the allowances for owner operator truck drivers are reasonable, but you cannot condemn the authorities for questioning some of the outrageous claims that some drivers make.
Owen Jones, the author of this article writes on various topics, but is at present involved with truck sat nav systems. If you would like to know more, please go to our website at Laser Temperature Gun.