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What allowable expenses can your business claim for?

Paul Donohoe, the managing director of Tax Rebate Services, discusses what costs can be claimed back as a small business.
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If you run a business you will know all too well that it can be a nightmare to manage all your finances, but it’s essential to do so. You will also know that seeing a return on investment is key to success.

Keeping a hold on your expenses is a sure-fire solution to ensure your profits are accurate and that you come out on top, and if you’re diligent, you can end up saving yourself a pretty large chunk of money too. So, what can you claim for?

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The main contenders

Well, let’s start with the claimable expenses that you’ve probably already heard of. If you travel as part of your working duties to, let’s say, client meetings or to visit a supplier, then you can claim on the mileage you accrue.

If you’re going by car or van, then you can claim up to 45p per mile for the first 10,000 miles and then 25p for each mile after that. For those who complete their journey on a motorcycle, then it’s 24p for each mile you travel, and if you’re super-green, you can actually pocket 20p per mile for travel on your bicycle. However, you can not claim expenses for the journey between your home and your usual place of work, as this is considered a part of your everyday commute.

Another fairly well-known option is claiming for the use of office equipment and consumables (things like printer ink for example) that employees often take for granted. But these things are never just handed to business owners. The cost of purchasing these items and replenishing stock to keep them running can amount to a pretty large costs, and the tax on all these items can be reclaimed.

Working from home

Are you required to work from home as part of your contracted duties? If so, then you could be eligible to claim for some the running costs that allow you to work throughout the day, such as light and heat, telephone calls, broadband, and repairs for office equipment. You will however, only be able to claim for the bills that were necessary to complete the task at hand.

Pre-trading expenses

Thinking of clearing out all the documents you acquired prior to your business starting to trade? Well think again. It’s well worth keeping a hold of all those files, as you could be entitled to tax relief for the money spent during this period.

Training

The legislation regarding training is one that often surprises people. If the business pays for the training of a proprietor who is training for a new skill, the costs will generally not be tax deductible. However, if training is undertaken to update your skills and professional expertise then expenditure can be claimed back. The example of an electrician needing to go on a course to learn about new regulations in order to continue working in that industry is acceptable.

There are plenty more examples of things you can claim for, and you can find a full list of these on the HMRC website.

Keep a hold of everything

If you wish to claim you are obviously going to need proof of your expenditures. The first and most important step is to ensure you store all business documents in a safe place. This includes organising your receipts, papers and invoices in an orderly fashion so when it comes to providing evidence, it’s all to hand.

One final thing is to keep-in-mind is that HMRC can ask to see records of expenses for up to six years after they are claimed. So if you’re considering get rid of all the receipts, invoices and records once your HMRC claim is accepted, think again. If you’re unable to give proof several years down the line, you might even be asked to pay the money back.

All the above items are essential to consider when running your own business. You could be missing out on an opportunity to claim for all those business expenses and, equally as damaging, you could get into hot water with the HMRC for claiming back expenses that you are not entitled to. 

Paul Donohoe is the managing director of Tax Rebate Services.

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