8 business expenses you can and should claim for
23rd June, 2022
As a business owner, you are always looking for ways to legitimately minimise your tax burden, and claiming for all business expenses that you’re entitled to is a popular and easy way to achieve this.
Although the rules on claiming business expenses are straightforward, we sometimes come across misconceptions about what can and can’t be claimed, and often this is advice they have incorrectly received from friends or acquaintances.
The basics of Business Expenses
What expenses you can and can’t claim for in your business is an ongoing topic of interest, so let’s start with the basics. Claiming expenses is a tried and tested way to run your business in a tax-efficient way, but, and this is a big but, they need to be “wholly and exclusively to run the business”.
So it’s worth bearing in mind that although there are lots of things you can claim for, not everything you purchase for the business will be considered an allowable business expense. Allowable business expenses get deducted from your income when calculating taxable profit, which means you don’t pay tax on these items.
There are some slight variations depending on which business structure you operate in so it’s always best to get in touch with our team for specific advice.
What expenses can you claim?
The eight most commonly claimed business expenses are:
- Office, property and equipment such as rent, power and insurance costs, as well as stationery, phone bills, postage, and computer software
- Car, van and travel expenses such as fuel, parking, vehicle insurance, train or bus tickets, accommodation costs and meals on overnight trips
- Clothing expenses, such as staff uniforms or protective clothing
- Staff expenses such as salaries, fees for contractors, bonuses, pensions, and training courses
- Reselling goods such as stock or raw materials
- Legal and financial costs such as insurance, hiring a lawyer or accountant, and banking fees
- Marketing, entertainment and subscriptions such as advertising, website costs or software subscriptions
- Training courses that help improve the knowledge and skills used in the business
If you work from home:
The pandemic changed the way we work, with lots more people continuing to work from home, at least for a part of their working week. The good news is that you may be able to claim a proportion of your costs for things like:
- Council Tax
- Mortgage interest or rent
- Internet and telephone use
One way to work out which of your expenses can be directly attributed to your work is to, for example, look at the number of rooms you use for business activities or the amount of time you spend working from home. For items that are used for both personal and business purposes, it’s best to get advice from an accountant.
HMRC does require you to keep a record of your expenses for 3 years from the end of the tax year that they relate to. These can be stored in a digital format so once you’ve uploaded your receipt to accounting software such as Xero, you can get rid of the hard copy.
Our team is on hand to help with any questions about claiming your business expenses, so please do get in touch if we can be of assistance.