Let’s talk about expenses!
There are many benefits of running your own business – flexibility, uncapped earning potential, freedom and a sense of self. However, there are also great financial benefits, including claiming back your expenses and maximising your tax relief options.
Many businesses find that they are missing out on potential tax relief due to expenses they didn’t know they could claim. Things such as travel costs, corporate lunches and certain bills are tax deductible – always ask your accountant if you’re unsure.
Not just pens and paper, but office machinery such as printers, scanners and shredders. This also extends to the furniture used to house your office equipment. Ergonomic chairs? No problem! Laptop rest? Claimed! Anything that is used within your office can usually be claimed back as a business expense. Ensure that you keep the physical or digital receipts for your office purchases and don’t forget to give them to your accountant.
Directors phone bill
If you’re a director of a company, you can take out a business phone contract with most major providers. If you take out the contract in the company name, rather than your own, 100% of the bill can be claimed as an expense.
If you donate money, stock, shares, employee time or sponsorship payments to charity, you are able to claim tax relief. As a limited company, you may deduct the amount donated from your taxable profit, saving you money on your corporation tax. If you are an individual or sole trader, your charitable donations are tax free – as long as you keep a record of your donations. You also do not have to pay Capital Gains Tax on land, property or shares that are given to charity. Be sure to communicate all charitable efforts to your accountant to maximise on the tax benefits.
If you choose to work from home, then you cannot claim household bills as tax relief. However, if you have to work from home or have a home office for your business, there are a few things you might be able to deduct. You can claim a proportion of some of your household bills, such as telephone or internet costs. Use this free gov.uk calculator to find out how much you could claim, or ask your accountant. Or, if you haven’t got receipts to demonstrate your expenses, you can claim a flat rate of £4 per week (£208 a year) as ‘Work from home allowance’.
Not gym memberships or magazines, but professional subscriptions can be claimed as an expense. This might be network memberships, training schemes, professional journals or organisation memberships. Software subscriptions such as Abode Creative Cloud, MailChimp, Canva and GSuite are all claimable subscriptions too.
Charity subscriptions, mentioned above, should not be claimed as they have their own set of rules.
That’s right! If you run a team and want to treat them to a turkey dinner and some terrible dancing – you can! The expense of putting on a Christmas party counts as just that – an expenses claim (within reason):
You don’t have to pay tax on social functions and parties that are:
- £150 or less per head
- An annual event (such as business anniversary party, Christmas or summer barbeque)
- Open to all employees
For more information, always consult the HMRC website.
If you’re ever in any doubt about expenses claims – it’s best to check with an expert. The penalties for incorrect tax returns are high, so don’t risk it.
Want to know more? Why not check out our specialist FREE resources on the topic:
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