All business owners want to see a return on investment. However, they also want to be sure their accounts reflect both their income and expenses.
Claiming back the correct expenses is a sure-fire solution to ensure your profits are accurate and therefore, your tax bill is not more than you are legally obliged to pay. The tricky part comes in knowing what and what not to claim for.
The UK’s leading tax service, Tax Rebate Services, provides professional tax and accountancy services to people across the country to ensure they never lose out on the money they are legitimately owed. We got in touch and they gave us the following advice on business expenses and knowing when to make a claim:
Work from home
Are you required to work from home as a part of your contracted duties? If so, you could be eligible for work-related expenses to cover the use of light and heat, telephone calls, broadband and repairs to business equipment. But this only covers the things you require to complete the task in hand. You will not be granted extra cash for a space that isn’t dedicated to your work, so be sure to rid the place of distractions and clutter before getting your head down.
Business trips
If you work in a B2B business, you may be required to meet with clients and/or suppliers on a regular basis. The good news? You can claim mileage allowance of up to 45p for each mile for the first 10,000 miles and 25p thereafter. You can’t include any expenses between your home and journey to work as this is considered part of your everyday commute.
Travel outside your regular commute is generally allowed providing it is “wholly and exclusively” for work purposes. However, it goes without saying, you can’t claim for penalties or fines so that means no speeding or dodgy parking!
Training
The legislation regarding tax deductions for training often surprises people. If a business pays for the training of a proprietor (whether in a partnership or sole trade), and the training is for a new skill, the costs will generally not be tax deductible.
If you however undertake training in order to update your existing skills and professional expertise then you will be entitled to make a claim. The example of an electrician who is training to learn about a new regulation which has come into force which he needs to learn in order to keep his job is perfectly acceptable.
Keep track of everything…
The first and most important step when making a claim is to record all business transactions. This includes holding onto your receipts and filing them away as proof of purchase. This will ensure you claim back everything you are entitled to, and it is a HM Revenue & Customs requirement so it’s essential to do so.
All of the items in this business claims list require close attention. You could be missing out on an opportunity to claim for expenses you are entitled to or alternatively risk getting in trouble with HMRCfor claiming back disallowed items. Therefore, it’s a good idea to seek professional advice from tax experts before making a claim.