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 filing their tax returns, which in essence means claiming tax relief for operating costs that they have incurred in the execution of their work. It is the difference between what an employed person earns using the boss’ equipment and a self-employed person earns using their own tools. 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 kind 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 varies 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 terms 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 subject because it is very complicated, varying from country to country. The main point is that you are not permitted to deduct the total payments for the truck, only the interest.
Another major cost that drivers can claim back are road fees. If you have to pay anything to remain on the road, you are allowed to off-set that against your income. The same goes for cleaning, washing and maintaining the truck, but you must retain all the receipts.
No tax man will believe you without them. Meals and over-night lodgings are also tax-deductible, but again, receipts are an absolute essential.
Many people think that they can claim for clothing, but this is a difficult issue. You are only allowed to claim for working clothing that can only be utilized wholly and exclusively for work. Overalls are a good example, 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 fighting them - unless you win. However, if you fight and lose, you may incur penalties from the tax office. Sometimes it is simpler, and cheaper, to just pay up, unless it endangers your driving license.
Fuel bills are a substantial 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.
Cell phones, sat nav and laptops are necessary to many drivers, but authorities 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 reasons.
You may get away with claiming for air-con and even a refrigerator to keep your food cool or a special ergonomic seat for your back, but do not count 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 writer of this article writes on lots of topics, but is at present concerned with truck sat nav systems. If you would like to know more, please go to our website at Laser Temperature Gun.