This is not an exhaustive list, because of the unique tax situation of each company, but guidance on the kind of the expenses that can be claimed.
If you have any queries, ask your accountant before making the purchase!
The overriding principle is that the expense should be WHOLLY AND EXCLUSIVELY for the purpose of your business.
If an expense is used for both business and personal – for example, your mobile phone – you can calculate a percentage for the business claim, or claim specific costs incurred for business.
Some items do not need a receipt to support them – for example, a claim for use of your home as a business base – but you must always be prepared to justify any claim you make, with some form of evidence.
These are called “cost of sales” and are related specifically to your product/service:
- Purchase of materials to make your product
- Selling and transport costs, distributing the product
These are called “overheads” and are related to the overall running of your business:
- Marketing/promotion and advertising.
- Accounting and legal costs.
- Telephone costs.
- Salaries for your staff. You may need to be registered for PAYE.
- Consultants/part-timers who are also self-employed, but they should provide you with an invoice, otherwise they will be considered employees.
- A car can be purchased by and for the business, but if it’s used for personal trips, the travel will not be wholly deductible. The purchase cost may not be fully deductible in the first year, but over several years.
- Vehicle running costs – these can be claimed EITHER as business mileage x the HMRC rate (easier to administer and calculate, and applicable if you use your own private vehicle), or a percentage of the actual running costs, including lease interest.
- Fares on business trips.
- Accommodation costs if you stay somewhere for business.
- Subsistence – that is, food and drink for yourself – can be claimed during business travel, within reason.
- Costs of business premises, OR
- Use of your home as your central business base. This is to cover the percentage of utility costs you incur by working at home. This can be claimed as either a weekly amount (easier to calculate), or a percentage calculated from your utility bills for the whole house x the proportion of the house you use for business.
- Training – but only while you’re trading, not to qualify you to start trading in the first place.
- Equipment, for example computers, office furniture. If it’s a large value item that will last you for many years, it’s called a capital item, and you may have to claim this over the course of several years, rather than in the year of purchase.
- Sundry expenses – stationery, postage, etc.
- Entertaining – clients or staff – should be included in your expenses, but some of it will not be deductible for tax.
- Donations – only if they’re to do with the business, for example a chamber of commerce/trade association.
- Subscriptions – trade journals, professional memberships, marketing platforms etc.
- Business insurance – for example, on business premises, or public liability.
- Bank fees if you have a business bank account.
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