At the last count, unclaimed business expenses cost UK small businesses a whopping £238 million each year. That’s a lot of money that could be lining small business owner’s pockets.
We constantly remind the contractors we work with to claim for everything they’re allowed to because expenses are off-set against the profit they pay Corporation Tax on.
So, now you can see why we think it’s important to claim for all allowable business expenses, even the smallest. If you need a reminder of what you can claim, our in-depth Expenses Guide has a comprehensive list.
For this article, we’ve decided to look at some of the less-commonly known expenses you can claim for:
These are substantial items that you intend to use for your business for a long time. This may include; a computer/laptop, printer or an office desk.
These types of purchases are referred to as ‘assets.’ You’re entitled to claim tax relief, known as a Capital Allowance against the original cost of the item.
We need to point out that the capital allowance doesn’t apply to items that are either leased or are purchased for personal use.
All work and no play, well it’s just no fun.
So, to enable you to let your hair down and have fun with your employees (if you have any), HMRC provides an ‘exemption’ for functions for you and your employees.
The rules state that you can claim expenses related to putting on the function up to £150 per head, per year.
If the costs associated with the function, are under £150 and they satisfy other criteria, they will be exempt from tax and National Insurance. However, if they go over this amount, even by a penny, the whole amount will be subject to tax and NI.
See our article, ‘Can you claim a Christmas party as a business expense’ for further guidance.
Food fuels the mind – which is important when you’re a busy contractor!
Meals are an integral part of the day, food and drink that is purchased as part of your normal working day, so your sandwich and coffee from the local deli, can pass as an allowable business expense provided that you are not caught by the 24 month rule.
If you’re looking for ways to get your company name seen by people, a sponsorship deal is something that may be worth considering.
Many sports clubs and sporting venues advertise for sponsorship and depending on your type of business, it can be a useful way to win new clients.
However, HMRC is wary of businesses making claims for sponsorship costs.
So, before you agree to the sponsorship, ask yourself if the sponsorship:
· Promotes the business?
· Costs and benefits are wholly and exclusively related to the business?
If you can answer ‘yes’ to both questions, it may be a legitimate business expense. Bookmark our Expenses Guide, so you’ll have easy access to a reminder of what you can claim as an allowable business expense for tax purposes. Or, if you want to ask us a question, give us a call on 01962 867550.