What business expenses am I allowed?

The complexity of the tax system means that there are a number of business expenses which you might have overlooked or are unaware of. The following are particularly useful for sole traders or if you’re self-employed. So what will HMRC allow you to claim?

  • Financial and legal costs – financial and legal costs will typically count as allowable business expenses and can include accountants, solicitors, surveyors, and architects fees, professional indemnity for insurance premiums, bank, overdraft, and credit card charge, interest on bank and business loans, hire purchase interest and leasing payments.
  • Unpaid invoices – if you have a customer who is not paying it’s possible to claim back money that you won’t be receiving. Known as bad debt, you can choose to write off the amounts if you’re certain they won’t be recovered in the future. Debts not included in your turnover or related to the disposal of fixed assets aren’t allowed.
  • Charitable donations – any donations made through Payroll Giving are taken before Income Tax is calculated, off setting your tax bill.
  • Marketing – allowable expenses include advertising, free samples and website costs. Hospitality relating to customers or suppliers isn’t permitted.
  • Subscriptions – subscriptions and memberships, such as a membership with a trade organisation, are allowed – again as long as they are work-related.
  • Business phone lines – if you or your employees need a phone line at home, then this is an allowable business expense. The telephone line rental, business-related call charges, and private call charges can also be included.
  • Tools – if you need to buy tools or equipment for your business, it’s possible to exclude these costs as an expense as long as they are exclusively for use at work.
  • Plant and machinery – any assets bought for your business can be deducted from your profits before paying pax. This can include business cars, vehicles, and even fixtures like kitchens or bathrooms.
  • Employee training – any employee training costs can be claimed as a business expense, as long as any travel, courses, or textbooks are solely for work-related training.
  • Clothing – although uniforms have to be reported to HMRC, no tax or NI is due as long as the clothing is needed for employees to do their job, and only worn for work.

Don’t forget that to be classed as allowable expenses, any of these expenses must have been clearly incurred as part of the running of your business.