Five Allowable Expenses You Might Be Forgetting to Claim

They say time is money, but really, it’s not. If we ever go broke, time is all we got. J Cole

FIVE ALLOWABLE EXPENSES YOU MAY BE FORGETTING TO CLAIM for ybkbs magazine for smalll businesses
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By Jess Dixon

Who amongst us has not groaned when it comes to tax return time? Filing your annual return with HMRC and paying the accompanying bill isn’t fun for anyone. (Hey, if you find tax accounting fun, I want to hear from you!) But getting it right is a vital part of running a business. Making a mistake can result in additional time spent putting it right, not to mention costly HMRC fines if you get caught out.

But did you know you could be missing out on certain legitimate business expenses that you can claim for? If you’ve spent money on any of these five things this last year, don’t forget to add them to your expenses:

Household expenses if you work from home

Think you can’t claim any office expenses because your home is your office? Think again! In fact, you are allowed to claim a proportion of your utilities if you work and run your business from home.

There are two ways to do this. You can work out a proportionate amount of each bill based on how many rooms are in your house and how many hours you spent working there, but that’s complicated and time-consuming. Alternatively, you can claim a flat rate per month depending on the number of hours you worked from home. Here are the figures for 2020/21:

HMRC chart of allowable expenses if working from home

It doesn’t look like a lot, but if you work full-time hours from home, that’s £312 per year more in allowable expenses.

Food when you’re travelling for work

Are you attending an industry conference that is directly related to your business or heading out of town overnight to meet a client? As long as the trip is for work, you’re allowed to claim back reasonable food and drink costs.

The tricky part is that there’s no specific rules as to what constitutes “reasonable.” In general, you can claim for meals in restaurants, takeaway food, breakfast in hotels, and (if you’re staying overnight in self-catered accommodation) groceries for the duration of the trip.

While there are no rules to say you have to go for the cheapest option available, you should exercise judgement. A meal at a mid-range chain or independent restaurant is likely to be fine. A banquet at the Ritz will probably raise some eyebrows at HMRC.

You can only claim for alcohol if it’s purchased with a meal and in a reasonable quantity, e.g. one glass of wine with dinner.

By the way: you can also claim for hot drinks, like your morning cup of coffee, if you’re travelling overnight or working away from your usual place of business. But this only counts if the trip is necessary for business reasons – sadly, decamping to the Starbucks down the road for a change of scene doesn’t count!

Membership and subscriptions

Are you a member of a professional body or organisation associated with your business? If so, you can claim back the full cost of your membership. This applies even if membership is not required by law. The one caveat here is that you can only claim for a monthly or annual membership fee – lifetime memberships are not eligible.

If you subscribe to any professional publications such as trade journals that are directly related to your business, you can also claim the full cost of your subscription.

Marketing costs

Any costs associated with marketing your business are allowable. Have you accounted for that £100 of Facebook ads you took out earlier this year, or the £250 you paid for a half page in a local publication? These marketing expenses are often forgotten but if you keep track of them all, you might be surprised how much they add up to in a year.

Allowable marketing costs include print advertising (newspapers, magazines etc.,) direct mailings, digital advertising such as social media and email marketing costs, any expenses associated with producing and distributing free samples or trials, and even the hosting and maintenance fees for your business website.

Incidental office supplies

All those little things you need day to day if you work for yourself? Chances are, many of them will be claimable as expenses on your tax return. Examples include printer paper and ink, stationery, stamps and postage, and even software that you have to pay a regular license fee to use.

Expenses add up!

You might not think it’s worth claiming that £3.49 sandwich or £4.50 book of stamps, but all these small amounts really do add up. As a small business owner, it makes no sense for you to pay more tax than you need to.

So keep your receipts, keep a record, and claim all your allowable expenses. You might be surprised how much you save!

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