Are you claiming all your allowable business expenses?
If you are self-employed, claiming all your allowable business expenses can reduce your taxable profit. As a result, you pay less Income Tax. Allowable expenses are costs incurred wholly and exclusively for your business.
What counts as an allowable expense?
Typically, you can claim a wide range of everyday business costs, including:
- Office costs, such as stationery and telephone bills
- Travel expenses for business journeys
- Business insurance premiums
- Advertising and marketing activities
- Staff costs, including wages and subcontractor fees
- Stock and raw materials
- Running costs of your business premises
In addition, you may claim training courses that maintain or improve the skills needed for your business. However, courses that teach entirely new skills usually do not qualify.
Mixed business and personal use
Where an expense covers both business and personal use, you can only claim the business element. For example, imagine you use your mobile phone for work and personal calls. In that case, only the business proportion of the bill is allowable. Therefore, keeping clear records of your usage really matters.
Working from home
If you work from home, you may claim a proportion of your household costs. These include heating, electricity, internet, rent or mortgage interest, provided they relate to business use. Alternatively, simplified expense allowances let qualifying claimants use flat rates. In practice, this approach covers working from home and business mileage, rather than calculating the actual costs.
Equipment and capital allowances
If you purchase equipment, machinery or business vehicles, the cost may qualify for tax relief. Specifically, you claim this through capital allowances, depending on the accounting method you use. Consequently, it pays to review each purchase carefully before your year end.
The trading allowance
If you claim the £1,000 trading allowance, you cannot also claim allowable business expenses. So, weigh up which option benefits you most. Meanwhile, keeping accurate records throughout the year helps you claim every relief you are entitled to. Furthermore, good bookkeeping makes completing your tax return far easier.
Speak to our team
Are you claiming all your allowable business expenses? Get in touch with our team today for tailored advice. We will happily review your position and make sure nothing gets missed.
