Your business could be paying much more tax than it needs to.
If you’re not claiming legitimate tax deductions, then your tax bill will be a lot higher than it should be.
However, it’s important that you only claim legitimate tax deductions, and that you retain your records for six years. Failing to do so can result in a fine of up to £3000.
Keep reading to find out what items you can claim as tax-deductible to legitimately lower your tax bill.
Mobile Phone Usage
Your mobile phone costs may be deductible from your tax bill. However, this only applies if the phone is exclusively used for business purposes.
Employees can either pay the phone costs themselves and be reimbursed, or have the business take a contract out in the name of the business and pay it directly.
Either option is tax-deductible.
Another expense that you can deduct is accommodation. The accommodation must be used exclusively for business – for example, paying for a hotel on a business trip, or renting an apartment when working away.
However, this does not include weekends, so it’s important to ensure you don’t include weekend costs in your calculations.
Accommodation deductions can also include council tax and utility bills, which can work to save chunks off your tax bill.
More and more business owners are opting for home offices – and the good news is that you can claim the cost of a home office from your revenue.
There is also tax relief while working from home – a fixed rate of £4 per week off your tax bill, as well as a certain percentage of your utility bills (for example, WiFi or electricity).
Everybody loves a Christmas party and other company events – but did you know that they are tax-deductible?
The rate you can claim back is £150 per head – and this includes other annual events, such as easter parties or end of year parties.
Certain memberships that are used for business purposes can be classed as a business expense.
For example, memberships to professional associations such as The Law Society, or networking groups.
If you pay for accountants or bookkeeping services for business use, then you could claim it as a business expense when filing your tax return.
However, if the expenses occur due to a HMRC enquiry that proved to be due to fraud or negligence, then you can’t claim them back.
If you hire a vehicle exclusively for business purposes, then you can claim the expenses back from your tax return.
However, if you use the vehicle over weekends or evenings for personal use, then you should calculate how often you use it for business – and only claim that figure back.
Anything other than business usage won’t be tax-deductible and can result in a fine if you claim otherwise.
You can also claim mileage as a deductible expense. You must only claim it if the journeys are exclusively for business purposes.
If you drive a car, you can claim 45 pence per mile for up to 10,000 miles, and then 25 pence for each mile after.
However, if you ride a motorcycle, then you can only claim 24 pence per mile.
The figure you claim includes petrol as well as general wear and tear of your vehicle.
As well as claiming back mileage and vehicle hire costs, you may also be able to claim back parking costs.
However, you can’t add parking fines as an expense, as this classifies as an infraction of the law.
Computer consumables, as well as hardware, can be deductible expenses. However, only if used wholly for business purposes.
The costs can also include repairing computer equipment, such as broken printers or monitors.
If, however, you use a computer or printer for personal use as well as business use, you must calculate how often you use it for business and only include that in your tax return.
The cost of training courses used for employees or business purposes can be claimed back.
However, if you take personal courses that aren’t related to your business, then you won’t be able to claim it.
The cost of training is generally only valid when it can be beneficial to the business or role, or if it is essential training.
Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.