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Business Expenses: What can I Claim?

If you run a business it is likely you know that you can claim expenses on some of your costs. Expenses are tax deductible and can therefore provide a helping hand to your business on its road to success.

If you manage your expenses carefully, you could potentially save yourself a large sum of money. So, what are you able to claim for?

Vehicle Mileage

One of the most common expenses claimed is vehicle mileage and if you use a car or van for business purposes you can claim 45 pence back per business mile for your first 10,000 miles and 25 pence thereafter.

For motorcycles you can claim back 24 pence per mile, which is uncapped. However, you may not know that you can also claim back bicycle mileage at 20 pence per mile.

You can find out more about claiming business travel expenses here.

Office Equipment and Consumables

Office equipment and other consumables that are essential to the running of your company are also amongst the most commonly claimed business expenses. These may include computers, stationary, printer ink for example.

If your business is a limited company you may also be able to claim on your own equipment. For example, if you own a laptop, mobile phone, or tablet computer, you are able to purchase these items from yourself, so that they become company assets and claim the tax back. This is a good also way to personally get tax-free money from the company.

Rent and Rates

If you run your business from home, you will also be able to claim on your rent or mortgage and bills, by allocating a proportionate amount to your business’ usage.

Be aware however, that this is limited to the usage of your business, so for example; if your business occupies 20% of the square footage of your home, you can only claim 20% towards of the rent or mortgage. Furthermore, if the space is shared between business and personal use, you are only able to claim for the time it is used for business.

Bills are claimable in the same way, however these can be more difficult to divide between personal and business use. For this reason telephone and internet service providers offer business accounts which might be worth looking into.

Capital Allowance

As it is not possible to claim for the expenses on some things, you must claim for a capital allowance instead. Capital allowance refers to the sum of money a UK business can deduct from the overall corporate or income tax on its profits.

Capital allowance derive from certain purchases or investments, outlined in the Capital Allowances Act 2001, but considers a number of things including:

  • The cost of vans and cars, machines, scaffolding, ladders, tools, equipment, furniture, computers and similar items you use in your business
  • Expenditure on plant and machinery
  • Items a business operator used privately before using them commercially
  • Certain types of buildings - including improving a property, and converting space above commercial premises to flats for renting
  • Research and development facilities and equipment (Research and Development Capital Allowances)

It is a complicated area however, so it might be worth consulting an accountant for advice.

Other Considerations

When claiming for expenditures it is important to have and retain proof of purchase. HRMC can request proof of expenses up to six years after they have been claimed.

If you are unable to provide proof, you could be asked to pay the money back, so it’s important to always keep track of your receipts and invoices and store them in a safe place. It is also advisable that you file them in an order that facilitates easy access them at a later date.

For a full list of items that you can claim expenses for please see the GOV.UK guide.

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