While any profits your business makes is subject to tax, plenty of expenses can be deducted to get some tax relief. Below is a list of the most common expenses you can claim. Don’t forget to keep track of your expenses and copies of all receipts, bank statements, PAYE records, etc for at least 5 years. HMRC may check them so always best to be prepared!
These can be claimed in full and are a valid business expense.
Advertising & Marketing
A valid business expense and can be offset against company profits. This may include sponsorship, printing of leafets/banners, promotional goods, etc.
Bank Interest & Charges
These can be claimed if they are on a business account not a personal account.
Broadband & Telephone
If you work from home full or part time then you would claim a portion of the broadband and/or home telephone that you use for business purposes. If you have a dedicated office with its own broadband then you would take out the contract in the business name and the full cost would be claimed. Mobile telephone bills would work in the same manner and you could claim a portion of the bill if you have it in your own personal name or claim the whole bill if the contract is in your company name.
Use of home
There is a simple way of calculating this which is claiming the £6 per week flat rate as set by HMRC for use of your home. Or you can calculate the costs as determined by firstly calculating how much time you spend working at home, then working out a percentage of your bills to allocate to business use. So for example if you spend 2 days working at home and have a dedicated home office and a further 4 rooms in your house. Then you would add up your bills for the time period e.g. a year, divide by the number of rooms and then divide by the time you spend working at home to get a portion of business use. Home bills that can be included would be rent, mortgage interest, utilities and council tax.
A valid business expense that can be claimed personally on self assessment or through the company if the company made a gift aid donation.
Childcare vouchers can be used for limited company directors/employees to gain tax relief on childcare up to a maximum amount each month. Currently £28 per week for higher rate tax payer or £55 per week if in the lower bracket. (Only valid for those already registered in a voucher scheme prior to 05-04-18)
Clothing & Workwear
You can claim for protective clothing that is essential to your role or branded workwear, etc. You cannot claim for items that have a dual purpose i.e. you work in an office and need a new suit as this could be worn away from work also.
Computer equipment and tablets, etc that are business use can be claimed as an expense and offset against income to reduce profits and tax bills. Larger purchases would be classed as capital assets and would be depreciated over a number of years depending on the lifespan of the item. These would be dealt with on a individual basis and figures calculated accordingly.
When using your own private vehicle for business use, the mileage would be claimed as a valid business expense. Current rates are 45p per mile for the first 10,000 miles and 20p per mile thereafter. You can also claim mileage for your bicycle at 20p per mile. Mileage covers wear and tear, insurance, etc for your vehicle so you would not claim any other motoring expenses, only the mileage amount.
Travelling for Business
You can claim all costs incurred such as travel costs (flights, trains, buses, etc), accommodation and meals.
Business insurance can be claimed as an expense such as liability insurance, etc and also some life insurance policies. Please enquire further as this would be reviewed on a case-by-case basis.
This would be a valid business expense and in the case of a limited company can either be paid via the company bank account to get company tax relief or paid personally to get personal tax relief on self assessment.
Subscriptions to professional bodies are a valid business expense as long as they are a recognized by HMRC (a full list is available at www.hmrc.gov.uk)
Printing, postage & stationery
As long as all for business use then these are valid business expenses.
Training that is wholly for business use would be a valid business expense.
Entertaining is not an allowable business expense and cannot be claimed. However you can pay for an annual staff party for your employees and can claim £150 per employee.
Cycle to work Scheme
Employees can buy a bike through their employers to gain tax relief. Full details on eligibility and the scheme can be found at www.hmrc.gov.uk
Company Car / Commercial Vehicle
This area is a little more complicated and we do prefer to do a personalized consultation on this area. However briefly, commercial vehicles would be allowed however may attract a benefit in kind tax for individuals. Company cars are almost always not worth claiming. They too attract a benefit in kind tax and this is based on the CO2 emissions of the vehicle, so detailed information on the vehicle to be purchased would need to be gained to produce a detailed breakdown of costs.
This list is not exhaustive and please do contact us if you have a specific question not answered in this article. All expenses can also be checked against HMRC’s guide 480 – Expenses & Benefits.
This article is correct as at July 2020, however we take no liability for any errors contained within. Our standard disclaimer applies in that we accept no liability for any actions taken on the basis of any information provided.