One of the most common questions we get asked when a client joins us is “what business expenses can I claim for?” Or “which expenses are tax deductible?”. So I thought I’d really briefly go through some of the main points.
The first thing to remember is that, as a very general rule, anything that you have purchased wholly and exclusively for use in your business is tax deductible – with some exceptions that I’ll get to later!
But a good start is knowing that the following are all broadly allowable:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
So, that list should give you a really good idea of where to start. It’s obviously not a complete list. But it should give you an idea.
Now of course, if it was as easy as that then we wouldn’t need accountants! So there are a few quirks to it and I’ll tell you about one of my favourites.
One that crops up a lot is around clothing. I spoke to someone the other day who told me that, as they had just gone into business and would be trying to impress people in meetings, they’d bought a really expensive suit. Their face fell when I told them that probably wasn’t tax deductible.
But why, right?
Well – this falls under something called a “duality of purpose” rule.
You’d have to wear clothes to a meeting anyway – regardless of whether you are self employed or not. Turning up naked is generally frowned upon.
And that suit will probably be worn for things outside of business.
So it’s not tax deductible. It’s not wholly and exclusively for the use of the business and it has a dual purpose.
Clothing that has a permanent logo on it – embroidered polo shirts etc. They’re fine – they’re treated like a uniform for tax purposes. But your expensive suit won’t be I’m afraid!
So hopefully that explains a little bit about what you can, and can’t claim for.
And my advice would always be to spend your time running your business and get an accountant to worry about this stuff for you!