You’re a start up and you don’t have money to throw around, right? So here are some business expenses you can deduct from your turnover to reduce your tax bill....
Allowable business expenses
The key word here is ‘allowable’. HMRC won’t let you claim for any old thing – in fact they’re very specific that expenses should be incurred ‘wholly, exclusively and necessarily’ in the running of your business. They have a handy business expenses checklist http://www.hmrc.gov.uk/guidance/480.pdf but in the meantime think ‘business’ not ‘pleasure’.
Claim for business insurance
Professional indemnity insurance and public liability insurance are both legitimate business expenses for a start up. And if you’re a limited company you can claim employers’ liability insurance, too. Got a company vehicle? Great – that’s included. Have an office? Perfect – contents insurance is an allowable expense as well.
As a start up you’ll want to be seen by as many customers or clients as you can. So you’ll want to promote your business to get visible. Well good news – you can use advertising, hire a PR firm and put money into a social media campaign and all those expenses can be claimed back.
Running your start up from a home office? You’re allowed to claim back part of your household costs and utility bills. When it comes to working out costs, you have a choice – you can either calculate them using a set weekly rate as outlined by HMRC or do the maths with which rooms you use for business and how long you spend working in them.
Claiming for bank charges
If you have a business bank account, you’ll be glad to know that bank charges are allowable expenses. Paying interest on business credit cards or loans? Yep, you can include those as expenses too.
Using your own car or van to drive to business appointments? You can claim business mileage at a rate of 45p per mile (up to 10,000 miles, then 25p for every mile). Bear in mind that if you’re commuting every day to a workplace, or driving to the same place continuously over a two-year period or more, you won’t be able to claim your travel as a business expense. Still, if you’re using the car for business you can include parking costs (not fines – nice try!), road toll fees and congestion charges. And if it’s a company car then you can include servicing and repairs as allowable business expenses. Taking the train, bus, a taxi or aeroplane? Keep your receipts as these are all valid business expenses too.
Travelodge here we come!
So you have a business trip that requires an overnight stay. As you think about having to leave your loved ones/dog/cat/budgie take comfort in the fact you can claim back your accommodation along with food, drink and subsistence. Be reasonable about this, though – HMRC won’t be picking up your extortionate bar tab!
* Need help figuring out your business expenses? Call 0117 950 2667 or email us at email@example.com