As most people know, you may claim expenditures on certain of your charges whether you’re establishing a new company or currently have one.
Helping entrepreneurs is a terrific approach to boost their chances of success. Why?
Expenses aren’t included against a company’s profit since corporations pay taxes on their earnings. As a result, they owe taxes on a significantly smaller sum.
If you put in the effort, you can save a lot of money.
What can you claim for?
The main categories of business expenses
Business travel mileage
Employees are reimbursed for business-related travel expenses through Mileage Allowance Payments (MAPs). The ‘authorised amount’ is the number of MAPs you may provide your workers without notify HMRC.
To calculate this, multiply the number of miles your employees drive for work each year by their vehicle’s per-mile charge (see below).
When estimating your employee’s mileage, it’s critical to include all of their cars.
Tax rates per business mile
|Type of Vehicle
|First 10,000 miles
|Above 10,000 miles
|Cars and Vans
A P11D form must be filled out for any amount over the allowed limit. The employee’s salary will be adjusted to include any additional compensation, and tax will be withheld and paid usual.
Your employee will be eligible to claim Mileage Allowance Relief on any leftover portion of the permitted amount that HMRC does not require reporting. The Mileage Allowance Relief Optional Reporting Scheme allows you to submit separate reports to HMRC for any such unused amounts (MARORS). To participate, please get in touch with HMRC.
Home office equipment
Office supplies and consumables like printer ink are common examples of items that might be claimed as part of an insurance claim.
Expenses expected to be used for less than two years may be claimed. This might include:
- Telephony and internet service charges
- Printer ink and cartridges
- In the last two years, you’ve been using the computer software in your company.
- If your company pays a renewal fee, you may continue to use the programme (even if you have used it for more than two years)
It’s possible to claim more equipment if you manage a small corporation.
As an example, if you already own a laptop, you may buy it from the manufacturer directly. As a result, it will be considered an asset of the company and its cost will be deductible.
In addition, you’ll get money directly from the business, which is tax-free.
Clothing and entertainmentIn order to claim clothing expenses, your employees must spend less than £150 per person (such as renting a good suit for a function or uniforms).
Rent and bills
You may be able to deduct some of your rent if you work from home., mortgage, and other monthly expenses from your taxable income. However, there are some restrictions.
How much rent you may get depends entirely on how much of your space is used by a company.
To put it another way, if you only utilise 10% of the space in your apartment for business purposes, you may write off 10% of your rent as an expenditure.
You can only get back 5% of the rent in such a case since you only use the room for work half the time and live in it for the other half.
When it comes to bills, they are classified between those utilised for business and those that aren’t.
You may deduct the following expenditures if you do your job while away from home:
- The cost of renting a place of business
- Rates for commercial and domestic water use
- Payments for services rendered
- Insurance coverage for your home
‘Plants and machinery’ are another area to watch for capital allowances. To name a few examples:
Fixtures for Machines (fitted kitchens, bathroom suites, fire and CCTV systems)
Rather than deducting the costs of some of these items, you’ll have to claim a capital allowance. But it may be difficult to navigate. Using the yearly investment allowance, you may deduct the whole cost of these things from your pre-tax earnings.
Business expense trackers
You may avoid printing and filling out paper forms manually by using a service that offers a digital version.
The SaaS software provider promises to identify duplicate costs by scanning your expense documents digitally through your smartphone.
This well-known UK accounting software company employs dashboards that are updated in real-time, and you may export bank data immediately from Quickbooks..”
According to Zoho Cost, it can input credit card transactions, manage mileage and automate expense reporting.
In addition to scanning receipts, compiling reports, and emailing them back to you, Expensify includes several more useful reporting tools. There is also the option of automated reimbursements.
HMRC has a complete list of costs that you may claim, and you can find it here.
To be reimbursed, you’ll need documentation of these expenses. Don’t forget to save your receipts and other paperwork in a secure place.
To save even more time in the future, keep them neatly organised.
It’s important to bear in mind that HMRC might ask for evidence of costs up to six years after they’ve been claimed.
Once HMRC accepts your accounts, you may want to reconsider chucking your paperwork. If you are unable to provide evidence when requested, you may be required to reimburse the company.