When it comes to business expenses, there are a variety of items that can be justified as claims. The only real limit on claims is that they have to genuinely be a cost related to your business rather than a personal purchase, that whilst benefiting your business can’t be attributed to it.
We’ve created this guide to highlight just some of the things you could claim as a business expense.
One major expense that can be claimed is travel costs. For example, if you need to travel to a client by rail, then you will be able to claim your train ticket as a business expense. Alternatively, if you drive to somewhere for business reasons, then you are able to claim up to 45p per mile for the first 10,000 miles of business-related travel, and 25p for each mile after 10,000.
Necessary business-related equipment can also be claimed. This means that things such as computers and printers that you need to meet business obligations can be claimed back through your business account, reducing the amount you’ll pay in total thanks to tax reduction.
This also applies to business uniforms. Whether it’s a branding decision to have a uniform, or the uniform is personal protective equipment in line with the health and safety requirements of the job, the uniform can be classed as an expense.
The exception is if your workplace has no uniform; your everyday clothes that you wear during work aren’t claimable.
For much bigger business expenses, you can claim costs back through the UK Government’s ‘annual investment allowance.’ This allowance covers things that you buy to make use of in your business. For example:
All of these purchases would fall under the annual investment allowance, and can be claimed as business expenses. The upper limit of this allowance is currently set at £200,000.
Another point to consider is pre-trading expenditure. No matter what kind of business you are, you’ll certainly incur some costs immediately after formation leading to your first sale. The pre-trading expenditure ‘window’ is from the moment you register as a business through to whenever you make your first sale. For example, you will be able to claim back on rent, bills, and equipment purchased between formation and your first sale. The time limit for this is seven years before the first official sale.
It might feel as though being self-employed or working from home means you can’t claim business expenses. That isn’t necessarily the case, as you can still claim a great deal of costs incurred to you in the name of your business.
Say an office worker uses the internet at work for business reasons, as its essential to completing their work, the entire bill is applicable as a business expense. The same is wholly applicable if you’re self-employed.
Essentially, home workers can claim a portion of their costs based on how much of it was used for the business. For example, you can’t claim your home’s entire electricity bill as a business expense, but you can claim some of it back.
This is applicable for all bills that a regular business can occur, such as heating, internet, and rent, but a fair method of calculating the proportion you used during business hours must be in place. However, if you would prefer to avoid calculations to find exactly what portion of your home expenses are claimable, then you are able to claim a flat rate of £10 to £26 a month based on number of hours worked.
FSB’s Business Banking service is designed to help meet all the day-to-day needs of operating a business.
Our service can make business operation simpler for you, which allows you to focus on the bigger matters that need your attention.
FSB’s Business Banking service provides you with benefits such as:
To find out more, visit our FSB Business Banking page, or get it touch with a member of our team now.
FSB members are entitled to a specially tailored bank account from the Co-operative Bank, giving you the freedom to focus on running your business.