Maximise Expense Claims – Know How You Can Increase Profits and Save Tax

Maximise Expense Claims

No matter whether you’re a company owner, sole trader or an employee, here is everything you need to know to maximise expense claims. HMRC allow many expenses arising from work to be reported as business expenses, reducing the income subject to tax.

There are rules to follow though. Some items are allowable and some are not. The basic rule is that the expenses must be “incurred in the course of business” but there is rather more to this to consider. Depending on your employment status, as listed above, it will vary as to what and how much you are allowed to claim.

What can sole traders claim as expenses?

Sole traders can claim various expenses to reduce their taxable profits. It is essential to keep accurate records and retain receipts for a period of 6 years to maximize expense claims and lower tax liability.

The rules regarding allowable expenses may vary depending on the nature of the business and specific expenses incurred. Understanding these allowable expenses and complying with HMRC guidelines is important for sole traders.

Here at Aston Black Accountants, we are well-versed in all things to do with sole traders. If you’re self-employed, there are a number of different things you can claim on your expenses, such as office expenses, travel costs, marketing, financial and legal costs, business insurance and even subscriptions.

Please take a look at our previous blog posts for more detailed information tailored to sole traders.

HMRC do provide their own guidelines on expenses self employed businesses can claim against business profits.

What can businesses claim on their tax return?

When a business is completing a tax return, there are a number of different things that they can claim that count as ‘allowable business expenses’. These are listed below.

  • Office expenses
  • Business premises
  • Travel expenses
  • Stock and materials
  • Legal and financial costs
  • Business insurance
  • Marketing
  • Clothing/ Uniform
  • Staff costs
  • Subscriptions

Claiming expenses for employees

Businesses can claim certain expenses that count as ‘allowable business expenses’. These include office expenses, travel costs, marketing expenses, financial and legal costs, business insurance, and subscriptions.

For employees, there are expenses that they may have to pay for while carrying out their work. This can include purchasing office supplies or covering travel expenses for business meetings. Employees can expect their employers to reimburse them for these expenses.

Please note that this is not an exhaustive list, and it’s always recommended to consult with a tax professional for specific guidance tailored to your situation.

Employees working from home: what expenses can you claim?

If you’re an employee that’s working from home, find out more about what expenses you could claim in our dedicated blog post.

VAT on business expenses

In the UK, VAT can usually be claimed back on business expenses, as long as the expenses are for business purposes and the business is registered for VAT.

So if you are claiming for expenses in your business accounts, you should also make sure you are recovering any VAT wherever possible. You will of course need to keep proper records including VAT receipts and invoices. If you have employees who are submitting expense claims, you should insist they provide the VAT receipts. As well as providing you with the documentation required to support the VAT return, this does give you the reassurance that employees are actually incurring the expenses they are seeking to reclaim.

Contact Aston Black Accountants

Looking for a local accountant based in the Milton Keynes area? Look no further, Aston Black Accountants are here to help. Give us a call today on 01908 904794, drop us an email at [email protected], or alternatively, you can fill out our online enquiry form, and we’ll be in touch.