5 surprising expenses that you can claim for

The life of a contractor is very different to that of an ‘employee’. One of the biggest differences is the structure of work. There will be periods where you are working flat out and there may be times when things are quiet.

It’s important that you keep a tight grip on your finances and one of the easiest ways to make sure you are operating as tax efficiently as possible is claiming for all the expenses you are entitled to.

In this article, we discuss what constitutes a business expense and we give details of five business expenses* that you may not be aware you can claim for.

*Please note, that these are expenses related to contractors who work through their own limited company.

Everything is a business expense. Right?

One of the most common misunderstandings with expenses is that every expenditure incurred by the business can be classed as an expense. Wrong!

An expenditure is only an ‘allowable business expense’ if it has been incurred ‘wholly, exclusively and necessarily’ in the course of carrying out your contract duties. Our article, ‘Ask an Expert: What you need to know about expenses’ discusses this in further detail.

Can I really claim for that? Yes, you can.

PR charges

Building a contracting business and connecting with potential clients can be tough. One of the quickest ways of getting your name out there is through networking. There are lots of groups and organisations who organise weekly or monthly networking events. The fees associated with these events can vary, from a couple of pounds to hundreds.

A key point to remember here is, no matter how small the networking fee is, keep your receipts and make sure you include them in your accountants. Over the period of a year, lots of little expenses can build in to a significant amount.

Fuel costs

If you use your own car for business, you can use the simplified business method or mileage method to work out the cost of your business journey.

Start by adding up all your business mileage for the tax year, then multiply this by HMRC’s rate per mile. Up to 10,000 miles per tax year, the rate is 45p per mile, and anything over this is charged at 25p per mile. These figures apply to journeys made in cars, motorcycles or vans.

Childcare costs

Yep, you read that right. If you are a contractor and you pay for childcare, some of your childcare costs can be claimed for as an allowable business expense.

How much this is will depend on which tax band you fall into. Further details can be found in our article, ‘How to get tax-free childcare for contractors’.

Sponsorship

Are you a member of a local sports team or are you connected to a sports group that could benefit from sponsorship? If so, sponsoring them could be a win for them and a double win for you. The team benefits from the sponsorship money and you could get to see your business name on their shirts, plus the sponsorship money is an allowable business expense.  There must be a commercial reason for the sponsorship however…so keep evidence of clients you may have won off the back of the sponsorship.

Accountancy fees

Accountants are a contractors’ best friend. We help to navigate you through the complex maze of tax regulations and legislation and ultimately help you to save money. It is worth the effort investing time and resources in building a relationship with an experienced contractor accountant. What’s even better is most of the fees incurred working with an accountant are tax-deductible.

However, it’ important to point out that the fee charged by your accountant for completing your personal tax return, is not an allowable business expense.

Want to know more?

If you’re new to contracting, our comprehensive guide to contracting should be able to answer any questions you may have. If you need further clarification on any point mentioned above, speak to us on 01962 867550 and our team will be delighted to answer your questions.