You probably can't claim for that basketball hoop on your office wall which helps you to "think outside the box", but many of the expenses associated with your business can be claimed for. These ‘allowable expenses' are there to make running your business more affordable. Thanks very much HMRC!
But, of course, as with all forms of bureaucracy, they don't make it easy. As a self-employed person you can claim for business expenses from the last 4 years that your business has been operating – but there are a few ‘allowable expenses' which come with a shorter time limit. Exactly what constitutes an allowable expense is also a bit of a grey area, too. These expenses must be ‘wholly and exclusively' for the continuation and profitability of your business. You need to be careful here. Claim for private expenses (either intentionally or by accident) and you could face an HMRC investigation and/or a nasty fine.
As a very basic rule of thumb here is a list of the most commonly claimed for expenses:
- Safety equipment and clothing
- Telephone and internet bills
- Travel expenses
- Salaries paid to staff
- Additional staff costs
- Uniforms (only with logos)
- Water and power bills (relating directly to the running of your business)
- Accountancy or other professional fees
- Business back, credit card and Paypal fees
- Business loan interest
- Irrecoverable debts
- The cost of goods bought to sell or provide a service
You can find a full and slightly frightening list of allowable and non-allowable expenses straight from the HMRC's mouth, visit their site to learn more.
There are some expenses which are asked about over and over again. If you're wondering "what can I claim on my tax return" because you've driven to Dundee and back for a mix of business and pleasure, or run up huge electricity bill at home because of work, don't worry – we have all the answers simplified right here.
You can claim for the cost of using your
car for purely business purposes. As of 2013/14 you can claim a new simplified flat rate per mile instead of dealing with actual costs involved in buying, maintaining and running your vehicle for business reasons. This flat rate means that you no longer need to keep track of the costs of running and repairing your vehicle. Instead, you'll just need to keep an accurate record of the number of ‘business miles'. If you do not wish to use the simplified flat rate, you can claim using the old capital expenses system (noting down running costs, purchase costs etc.). You can find out more from the HMRC here .
Business use of your home
Many self employed people work from home. This can make working out which bills you can claim for confusing. Fortunately, as of 2013/14, the HMRC have also introduced a simplified flat rate for utility bills and other expenses accrued through working from home. This rate is passed on how many hours you spend working from home every month. You can only use this rate if you work more than 25hrs a month from home and, as with the motoring flat rate, you don't have to use the flat rate if you don't want to. The old system is still available. All the details are here .
Now I know what to claim for, what next?
"What can I claim on my tax return?" is not a quick question to answer. There are hundreds of different allowable expenses and these all come with their own "ifs" and "buts". The HMRC website can help but, when your time is valuable, it can really help to speak to an online tax return specialist. We might be a bit biased, but we know that our service makes claiming expenses and submitting your yearly tax return blissfully easy and error free.
If you're going it alone, it's time to bite the bullet! All of your expenses should be claimed for when you fill in your self assessment tax return and submit it to the scrutiny of the HMRC. You can get going here – good luck!