We understand that you and your employees may need to claim for expenses whether its yesterday’s business lunch or last week’s mileage. The important question, however, is whether you know what you can and can’t claim for.
If you’re an employer or are self-employed, it is your responsibility to ensure that you only claim for ‘allowable expenses’, these are tax deductible meaning that you don’t have to pay any tax on the money spent.
From travel costs to stationary, there are a wide range of tax-deductible expenses, but with over 50 items featuring on the GOV UK A-Z list of expenses and benefits, what is often most confusing is knowing exactly what you claim and what is completely off limits.
Take a look below at our simple guide to expenses.
Business Expenses that you Can Claim
By claiming all of your allowable business expenses, you are reducing your profits, which in turn reduces the amount of tax your business will pay. Below are some of the key things that you can claim as business expenses:
Travel Business Expenses
This may include mileage, reimbursing travel expenses, accommodation, meals and other subsistence such as parking charges, tolls and business cards when you or your employees are travelling to temporary work locations. Don’t forget that you’ll need receipts showing the cost of hotels, parking etc.
You can claim 45p a mile for the first 10,000 miles in a tax year and 25p thereafter. If you or an employee uses a motorbike, the amount that can be claimed per mile is 24p but there is no mileage restriction.
Food and Entertainment Expenses
As an employer, you may need to provide meals for your employees and clients on occasion, and your employees may claim food expenses when travelling, for example. Here are some of the most common queries we’ve had when it comes to food related expenses.
- I lost my receipts; can I still claim? – If you don’t manage to get a receipt, or you lose them, don’t worry you can still claim. Just make sure your claim for subsistence is reasonable and try to keep receipts in the future. However, your business will not be able to claim back the VAT without a receipt.
- Can I claim for alcohol? – If you choose to drink a glass of wine instead of a glass of water, that is entirely up to you and it can be claimed when it is accompanying your meal. Just make sure it’s a glass of white and not a magnum of champagne!
- Can I claim for a business lunch? – If you are accompanied by a business colleague on a business trip you should take care just to pay your own way and claim for your share. If you treat your guests or clients, then the expenditure would be seen as entertaining and subject to a different set of HMRC rules.
- What about the staff party? – Different rules exist for group entertaining so be careful and seek advice before spending huge sums of money, as not only could you not be able to deduct it, but you and your staff might get a tax bill as well. Generally, the maximum that can be claimed per employee is £150; so you could spend this on an all-out Christmas party or across multiple events.
Work Uniform Expenses
Some specialist clothing required such as high visibility vests, jackets or hard hats may be claimed, including their purchase, changing and repair costs. Be careful though; you can’t claim for anything that could be deemed as standard clothing and not solely work related.
Examples of occupations which might be eligible to claim on their clothing expenses include:
- Agriculture workers
- Cabin crew
- Public servants including firefighters, police officers and NHS staff
- Uniformed prison officers
- Construction workers
- Gas workers
- Conductors and drivers on public transport
There are some expenses, perhaps handfuls, that you didn’t know you could even claim for. Take a look at these two examples below.
- Do you wear glasses or contact lenses and use a computer as part of your daily work routine? If so, you can claim for an eye test.
- Just as you drive to temporary work locations and may claim back mileage, you can also claim if you cycle. That’s right; cycle. Despite the fact that you don’t even use any petrol, you can claim 20p a mile in expenses.
Need a Hand?
In order to secure the biggest reduction in your annual tax bill, it’s important that you maintain good records. At FCF, our account service helps businesses of all sizes minimise their costs.
For more information about how we can help your business, give one of our team a call today on 0117 379 0810 or fill out a contact form and we’ll get back to you.
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This post was written by Steph Roffey