Expenses are a main part of running a business and there are plenty of allowances you can claim on your business to help reduce your tax bill.
With expenses it’s important to understand what can and can’t be put on the business.
We’ll look at the most common misunderstood expenses you can’t claim for.
Travel
If you’re using a private vehicle for business and travelling such as a van then HMRC will let drivers claim a mileage allowance.
Currently this allowance is 45p per mile for the first 10,000 miles of the year then 25p per mile after that. You can only claim this allowance if you’re out and about on business and can’t be claimed if you’re travelling to and from work.
Be careful though, if you’re travelling to the same location for more than 24 months then HMRC will class this as a place of work. This means you will not be able to use the allowance rules as you will be classed as an employee.
Business Trips
Business trips can be a great way to meet new contacts and secure new deals but beware, not all business trips can be claimed on expenses.
If you’re planning on meeting a potential client away from work then this can be deemed as business related. This means you’ll have no problems claiming this on the business expenses.
On the other hand if you’re planning on taking your family away for a trip over the weekend then this would be deemed as a personal expense. Personal expenses cannot be claimed on expenses, if you do and HMRC find out there will be serious fines.
Although this might seem fairly obvious you’d be surprised how many people try to claim personal trips as business expenses.
Clothing
Dressing smart for the office can be very important especially when you want to make a good first impression. Unfortunately for most people expensive suits and clothes will have to come out of your own pocket.
There are a few exceptions to this however. If you’re a tradesman such as a builder or tradesman then it is possible to claim for the cost of buying the specialist clothing.
Entertaining
Claiming your personal lunch on business expenses can be tempting, but you’re only allowed to do so if you are entertaining your own employees.
If the purpose of the event is to entertain your staff then you can claim tax relief and VAT. If however any clients decided to turn up for the meal then unfortunately it’s no longer an allowable expense.
If you take a client out for lunch then sadly you won’t be able to claim this on expenses, even if the lunch is work related and you are discussing deals.
Professional Membership
It is possible to claim back tax relief you pay on some membership or subscription fees to work related organisations. The only downside is you must require them in order to do your job.
For example if you’re an accountant with your own business then most likely you will be a member of an organisation such as the Association of Accounting Technicians (AAT). This organisation requires you to pay a yearly fee to be part of that group. In this case you would be able to claim that back on business expenses.
On the other hand memberships that are optional and are not essential to do your job can’t be claimed on expenses.
If you’re unsure which memberships can or can’t be claimed back then be sure to check out the official HMRC approved list of professional organisations.
Get An Accountant To Check Them
To make sure you’re claiming the right expenses on your business and not missing out on any potential savings it’s best to get a fully trained accountant.
An accountant will be able to give you advice on what things you can claim on expenses and which things you should avoid. Here at CRBH we offer a range of accountancy services for small businesses to help you save money on your tax bill. We also offer financial planning and payroll for your business so you can focus on more important things like growing your business and getting new clients.
To find out more information on how we can help your business grow contact us below
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