Starting a new business or managing an existing one involves various costs, but did you know that you can claim expenses on some of these costs? This can significantly reduce the amount of tax you pay on your profits, giving you the opportunity to save a substantial amount of money. Let’s take a closer look at the main categories of business expenses that you can claim.
Business Travel Mileage
One common expense that you can claim is Business Travel Mileage. Mileage Allowance Payments (MAPs) are payments made to employees for business-related journeys. The approved amount of MAPs can be calculated by multiplying the employee’s business travel for the year by the rate per mile for their vehicle. Any amount above the approved limit should be reported to HMRC, while anything below can be claimed for Mileage Allowance Relief.
Home Office Equipment
Claiming expenses for home office equipment such as phones, internet bills, stationery, and computer software can also help reduce your taxable income. You can even purchase equipment through your company to make it a company asset and claim the cost as an expense.
Clothing and Entertainment
Employees can claim for clothing expenses, including hiring a suit for an event, as well as for annual staff parties. As long as the cost per head for entertainment doesn’t exceed £150, it can be claimed as an expense.
Rent and Bills
If you run your business from home, you can claim expenses on rent, mortgage, and bills by charging a portion of these costs through your company. The amount you can claim is based on the space dedicated to your business activities.
Training Courses
Expenses for training courses that enhance your business skills and knowledge are also claimable. However, courses related to starting a new business or expanding into a new area are not eligible for claims.
Marketing and Subscriptions
Marketing expenses such as advertising, website costs, and trade body memberships can also be claimed. However, expenses related to entertaining clients or political activities are not allowed.
Capital Allowances
Capital allowances for items like machinery and fixtures can be deducted from your profits before tax. It’s important to understand the rules and regulations surrounding capital allowances to ensure compliance.
Business Expense Trackers
Utilizing software tools to track and manage your business expenses can streamline the process and ensure accuracy in your financial records.
Remember to keep all receipts, invoices, and documents related to your expenses organized and easily accessible. HMRC may request proof of expenses up to six years after they are claimed, so it’s essential to maintain proper records.
By understanding and effectively utilizing business expense claims, you can optimize your tax obligations and improve your financial management. Consult with HMRC or a financial advisor for personalized guidance on claiming business expenses.