What can I claim through my business?

You’ve been dreaming of setting up your own business for a while now. You’ve grasped an opportunity, diversified and gone for it. You’ve got yourself a website, a business plan, some stock and a home office. It’s while everyone’s congratulating you on taking the plunge into self-employment that a seasoned businessperson winks and says, “Don’t forget to keep all of your receipts”.

They’re right. In the UK, you can claim certain business costs and you can claim expenses on some of those business costs. Although HMRC set out guidelines on their website, a large proportion of UK businesses find claiming expenses complicated, and so do not claim their expenses.

At A V Accountancy Ltd, we’re keen to make sure that you make the most of every opportunity to make your business work. Claiming expenses is not a con – this is an integral part of correctly assessing your income and outgoings. It also helps us as your accountants to build accurate financial forecasts and help you generate profitable income in your career.

You might be asking “What can I claim?”. We’re here to let you know!

What can I claim through my business?

You pay tax on your net profits, so when you claim expenses, your profit decreases which results in a lower tax bill. That is why it’s important to note and retain receipts for everything that you spend on your business.

There are two main types of costs that you can claim: revenue expenses and capital expenses. One is a claim on day-to-day expenses, while the other is a claim on larger items that will serve your business long-term. Let’s look at these in more detail.

What can I claim as revenue expenses?

Revenue expenses are usually for short-lived purposes. For example, if you’ve had to catch a train to get to a business meeting, then this can be claimed as a revenue expense.

Other types of revenue expenses are as follows:

Vehicle mileage (45p per mile for the first 10,000 miles)
Office equipment and consumables such as printer ink, paper, notebooks, envelopes
Travel costs such as parking and fares
Advertising or marketing costs such as business cards, flyers and website costs
Financial costs such as monthly insurance costs or business banking charges
Staff costs such as subcontracting workers

What can I claim as capital expenses?

Capital expenses are usually assets you have bought and claimed against your taxable profit. Capital assets are usually larger items or long-term expenditure that has a lasting benefit for your business. For example, buying a tractor is integral to a successful farming venture. This output of money will have lasting effects on the business for several years, therefore can be claimed as a capital expense.

Other types of capital expenses are as follows:

Company cars and vans
Computers and relevant technology
Lawnmowers
Saws and electrical equipment
Specialist machinery such as arable and cultivation machinery

It’s worth noting here that there are specialist allowances for energy efficient or environmentally beneficial plant machinery – please check with your accountant to see if your eco-friendly equipment complies.

What can I claim for my business property?

When it comes to renting a business property and paying business rates, many people are unaware that they can claim these as a business expense. This is a great help when calculating your net profits.

There are limitations on claiming on rent and bills.
If you work from home, for example, the amount of rent you claim is dependent on the amount of space you use which is dedicated to your business. If you’ve set up a home office and that space is 10% of your private property, then you can claim 10% of your rent for this space.

This also affects bills. If you are in your home office and using electricity for your computer and lighting, and you want to claim for heating, then you can only claim for 10% of your overall bills. Also, it’s important to remember that you can only claim for these costs during business hours.

Any use of business vehicles outside of business hours cannot be claimed on your business expenses.

What can I claim without receipts?

In short, nothing. You must keep track of all invoices, receipts and paperwork. If you’re taking a potential client out for a coffee or a business breakfast meeting, keep the receipts. If you’re buying printer ink while out shopping with the family, then pay for it separately and keep the receipt. Get yourself a folder, file each receipt and invoice by which month it was generated, and then you can pass it all over to your accountant at the end of the tax year.

This isn’t the end of the road for your little bits of paper, though. HMRC can request to see your paperwork for up to 6 years, and if you cannot produce them again, you could be asked to pay the money back, so it’s worth keeping this documentation safe.

What if I’m still not sure what I can claim?

Then give us a call! We’re on hand to help you deal with every aspect of your business finances and can give you the green light on claiming the right business costs so that you can take full advantage of these business benefits. Either call our office for some quick advice or come to visit us for a full consultation so that you can better plan your incoming and outgoings over the next tax year. Whatever your questions, we’re here to help!

What can I claim through my business?

Arwyn Vobe Accountancy Ltd

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