A quick guide to allowable business expenses
What business expenses can I claim? This is perhaps THE most common question we get asked by both contractors and business
owners operating through limited companies and sole traders, especially those
who are only just starting out.
The answer to the above question is quite simple: any expense can be claimed provided it is incurred wholly, exclusively and necessarily in the course of the business. Business expenses need to be reasonable and cannot be of a personal nature. For example, if you are
renting an office for your business, you can claim the amount you pay in rent as a legitimate business expense. However, if you work from home and are living
in rented accommodation, the rent you pay in this instance would be considered
to be a personal expense and cannot therefore be claimed.
Based on our experience of over two decades, we have found that two categories of expenses are often overlooked and
not included in many people’s annual accounts:
This can be claimed if you are working away from home. You can claim £5 per day if you are away from home for more than 5 hours, and £10 a day if you are
away for more than 10 hours. Claiming subsistence alone can result in a tax benefit of approximately £460 depending on how many days you are working away from home.
This is a far more tax-efficient way of claiming travel expenses as opposed to the cost of fuel. It is also much easier to keep a record of the number of miles you have travelled for work rather than trying to keep a million receipts, which often end up in the bin!. You can claim 45p per mile for the first 10,000 miles you travel, and anything above that can be claimed at 25p per mile, resulting in significant tax savings at the end of the year.
There are many more expenses that you can claim depending on the nature of your business. If you are in doubt as to what you can and cannot claim, please feel free to contact us and we would be happy to advise you.