What expenses can you claim as a business owner?

In today’s business guide we will be looking into what expenses you can claim back as a business owner. This will factor in any size business, and anyone who is self-employed. Claiming back expenses can help with your business’ outgoing costs and it can also help entrepreneurs to give their business more chances of longevity. 

Businesses are required to pay tax on their incoming profits so claiming expenses in turn allows the business owner to save money by removing the tax amount, this means they can then pay tax at a much lower amount than they would have. If done correctly you will be able to save your business a fair bit of money and who wouldn’t want to do that?

Now, let’s take a look into what you are allowed to claim for your business. There are a few main categories of expenses within a business that you are allowed to claim for. These include; home office equipment, business travel mileage, bills and rent and believe it or not entertainment and clothing.

Travel expenses

Mileage Allowance Payment (MAPs) are paid to employees for business based journeys. As a business you are allowed to give your employees a certain amount of MAPs each year before you have to report it to HMRC and the term used for this is called ‘approved amount’. How much you get depends on the type of vehicle and then you get a certain amount of money for the first 10,000 miles and then anything above 10,000 miles the money changes. For example, motorcycles get 24p for the first 10,000 miles and then 25p above 10,000. Furthermore, if your employee goes over the approved amount this then needs to be reported on a P11D form and anything after that over the approved amount will then be deducted and tax will need to be paid as normal. On the other hand, anything below the approved amount doesn’t need to be reported to HMRC but the employee in question will then be able to get Mileage Allowance Relief on the unused balance of the aforementioned approved amount.

Office equipment

Home office equipment can be claimed back of course. This is a lot more prominent in the world now due to working from home during the pandemic, and many businesses deciding to keep working from home or adopting a hybrid mix. Office supplies and consumables such as printer ink that are essential for your employees to do their work can of course be paid back. The items that can be claimed back need to be used for two years or less and these include; postage, mobile, phone, internet bills, printing costs, printer cartridges and ink, computer software used by your business for less than two years, and also computer software that your business has to pay to renew it, this can be claims back even if it has been used for more than two years. If you are running a limited company there are ways to claim for more equipment, for example, if you need to purchase a laptop for work you can then claim for that as it is a company asset and will be a claimable expense for your company.

Clothing

Employees can claim for clothing items such as hiring or buying suits for an event or having to buy a uniform for work but it cannot exceed £150 per employee. It makes sense and you should definitely look into it if you already haven’t. Some businesses rely on clothes and looking good for certain events. An example is, if your business is in the clothing industry, then obviously all of your employees attending an event would need to polish up nicely for your brand.

Rent and bills

Another sector your business can claim back is rent and bills. If you work from home you can actually claim for your rent, mortgage and your bills too, by charging some of these costs through your business, but you have to remember there are some limitations. It’s not as if you can get your whole home life paid for through claiming it all back through work. The amount of rent you can get back is based upon the space that you have dedicated to conducting actual business. So you wouldn't be able to claim rent for your whole house but you could for just one room where you conduct all of your business. An example of this would be: if you have an office where you only do business that takes up 20% of the square footage of your home then you would be able to claim back 10% of your rent through expenses. The bills are worked out in a similar fashion where you can only claim back bills for the time you have been working from home.

I hope you have found this business guide informative and enlightening. If you are on the look-out for more business based information then go to the Business Butler website where you can read more business blogs. If you need any advice about your business expenses then click here and select one of business experts.

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