Tax Deductible Expenses

There are lots of tax deductible expenses that you can offset against your business turnover as well as the basic cost of sales such as materials, production, staff and marketing. However there are lots of different rules around them.  ‘Allowable Expenses’ differ depending on how your business is set up – for example different rules apply to limited companies than those for the self -employed.

Calculating your expenses for the self-employed can be critical to the financial health of your business so you need to make sure that you claim everything you can right from the start of your business, it can be the difference between profit and loss.

Most obvious are the costs related to your business premises.  You cannot claim for buying your premises but you can claim rent, maintenance and repair as well as utilities, security and insurance.

If you work from home you can claim a proportion of your bills depending on how much time you spend working at home and how much of your house you use.  If you are working from home for more than a specified number of hours then it is possible to use ‘’simplified expenses’ for utilities but this does not include internet and telephone – you have to work out the actual cost of those.

Office expenses can also be claimed though equipment such as computers, copiers and other office machinery may have to be treated as a ‘capital allowances’ if you don’t use cash accounting.

Profession fees such as legal and accounting costs can also be offset against tax. You may also require special insurance depending on the nature of your business. All insurance costs including public liability and professional indemnity are included along with buildings, stock and contents.

If you belong to any trade bodies or professional organisations which are appropriate to your business the membership costs are allowable expenses as well as subscriptions to relevant professional and trade journals.

Travel is a more thorny issue, especially for the self-employed.  You can include vehicle costs including insurance for business related vehicles, also fuel, servicing, repairs breakdown cover and hire charges where these can be attributed to your business.   

You can also claim for other means of transport such as rail, taxis, flights and buses.  Equally if you have to stay away overnight for business reasons you can claim hotels and meals.

Travel between home and work is not eligible for tax relief and if  a journey is undertaken for business and personal reasons, you must separate out the personal element of the costs.

To help with calculating costs for transport you can use the simplified vehicle expenses rates set out by the government.

If you need special protective clothing for work, or you have a uniform that you wear specifically for work then you can offset the costs against tax.  However if you use ‘everyday’ clothing that cannot be claimed.

These are just a few of the broad groupings of expenses that you can claim, and the rules surrounding them are complex.  If you want more information you can always contact HMRC or a professional Bookkeeper who will be able to help you keep appropriate accounts and advise you on all the other allowable expenses you can offset against your tax liability.

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