Running a small business is an exciting but challenging endeavor. While revenue generation is a priority, it’s equally important to manage and reduce expenses efficiently. One way to alleviate the financial burden is by claiming allowable expenses, which can significantly reduce your tax bill. Below are the top 10 expenses you can claim when running your own small business.
1. Office Expenses
Rent and Utilities
If you’re renting a commercial space, the rent and associated utilities (electricity, gas, water) are deductible expenses.
If you work from home, a portion of your home expenses can also be claimed, based on the percentage of your home that’s used for business purposes. Alternatively, it can be easier to claim HMRC’s flat-rate expenses for use of home.
2. Employee Wages and Benefits
Salaries, wages, and benefits like pensions or healthcare are some of the most significant expenses for businesses, and they are generally tax-deductible.
3. Travel Expenses
If you or your employees travel for business purposes, transportation, accommodation, and meals are deductible. Always keep detailed records to substantiate these costs.
4. Supplies and Materials
The cost of physical goods, like stationery, computers, or manufacturing materials, can be deducted as a business expense.
5. Professional Fees
Fees paid to accountants, lawyers, or consultants for services directly related to your business are deductible.
6. Marketing and Advertising
Whether you’re placing ads online or printing flyers, any money spent on marketing and advertising is a deductible expense.
7. Vehicle Expenses
If you use a vehicle for business purposes, you can claim expenses related to its operation, including fuel, maintenance, and insurance.
8. Training and Development
Courses, workshops, or seminars aimed at improving your business or professional skills are deductible.
9. Software and Subscriptions
The cost of software required for your business operations, as well as subscriptions to industry journals, can be deducted.
10. Business Insurance
Various types of business insurance, such as liability insurance or property insurance, are also deductible.
Claiming allowable expenses can provide significant tax relief and improve your business’s bottom line. It’s essential to maintain accurate records and consult a professional for specific advice tailored to your business’s needs. Likewise, it’s better to consult before you spend the money..
Remember that tax laws and regulations may vary and are subject to change. Always consult with a qualified accountant or tax advisor to ensure that you are complying with current laws and taking advantage of all the deductions available to you.
HMRC’s stance on this is “Wholly and Exclusive”, and potentially also “in the nature of your business” when it comes to determining whether it’s allowable to offset against tax, there is also the “duality of purpose” consideration, which means you need to consider whether the purchase does give any personal benefit.
Disclaimer: This blog post is for informational purposes only and should not be taken as professional financial advice. Consult your tax advisor for tailored guidance.