Seven tax deductible expenses you didn’t know about
If you’re self-employed or run a business, you will have ongoing and one off costs that you need to incur to keep your business running. This article will deal with some of those costs that you might not have known you could set off against your tax liability.
- Unpaid invoices
Whenever someone owes you money and doesn’t pay this is treated as a bad debt and is one of the most beneficial and under used expenses you can claim as a business owner. HMRC allows you to claim for any amount initially included in turnover, that you are pretty sure you aren’t going to receive.
You cannot claim for unpaid debts that:
- Aren’t included in turnover
- Are related to the disposal of fixed assets
- Aren’t properly calculated
Bad debts also cannot be claimed for on your tax return if you’re using the cash basis to account for your business.
- Marketing costs
HMRC allows you to claim for marketing costs including:
- Costs associated with free samples that have been distributed
- Website hosting and maintenance
This doesn’t mean that all of your wardrobe is tax deductible but certain items of clothing can be claimed to offset your tax bill at the end of the financial year. You may be able to claim for:
- Work uniforms
- Protective clothing needed for work
- Costumes for actors and entertainers
Professional bodies and trade publications charge a fee for membership and subscriptions. If these feed directly into your work, then you should be able to claim the costs of these on your tax return.
You can’t claim for any payments made to a political party and likewise, personal gym memberships do not count. Also any subscriptions to a charity should be put under charitable donations, not subscriptions.
- Use of home as office
One of the benefits of working from home, is that you can claim a for the additional expense of doing so however, there are a number of calculations that you need to do before you can claim for costs such as gas, electricity and water…
You will need to work out how much of those expenses actually apply to your business, i.e. if you live in a 3 room flat you may be able to claim up to 33% of your utility costs. The same rules may also apply to broadband or phone costs.
- The £208 deduction
One of the simplest deductions you can make is if you use your home in a minimal way to conduct extra business you can claim £208 a year or £4 a week in office deductions.
- Office supplies
Your desk is a great place to look for expenses that can be claimed on your tax return. HMRC allows you to claim a range of office supply expenses including:
- Desk phone
- Fax machine
- Postage costs
- Printer ink and cartridges
- Computer software
- Any computer software that your business uses and makes regular payments for in the form of a licence
These items are claimable insofar as they are used for your business for example, if you use your mobile for both business and personal use you have to work out a percentage use and only the percentage used for business needs is claimed.
If you have any questions regarding what you can claim and how you should be managing you self-employed finances, please get in touch with Robert Willison our Business Services Partner using the contact details below:
Tel: 01825 763366
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