Your business could be paying much more tax than it needs to. Although we all need to pay tax, it can be frustrating to find out we’ve paid more than necessary. If you fail to claim tax deductions, then your tax bill will be a lot higher than it should be.
It’s important that you only claim legitimate tax deductions and retain your records for six years. A penalty of up to £3,000 might be charged for each failure to keep or preserve adequate records.
Understanding what you can and can’t claim tax relief on can be confusing, but luckily, we’re here to help. To learn more about tax deductions for UK companies and how to reduce your tax bill, continue reading.
Company Tax Deductions
There are several tax-deductible expenses in the UK that businesses should be aware of. Allowable expenses include mobile usage and vehicle rentals, to name a few. Let’s find out the main business expenses you can claim.
Mobile Phone Usage
Your mobile phone costs could 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 company and pay it directly. As phones being used for business purposes are classified as allowable expenses, either option is tax-deductible.
Accommodation
Allowable business expenses also include accommodation costs. Like most business expenses, any accommodation paid for must be for work-related purposes. This could include:
- Renting an apartment while working away
- Paying for a hotel on a business trip
According to GOV.UK, you could be able to claim expenses on food and drink, parking fees, and public transportation costs while you’re working away, too.
Typically, you’ll need to provide proof of how much you’ve spent on your business trip. It’s important to keep receipts for the best chance of deduction.
Home Office
More businesses across the UK are allowing remote work. While working from home can be beneficial for numerous reasons, from saving on travel costs to greater flexibility, home office furniture is often required. Whether it be a desk or printer, such expenses can add up.
The good news is that home office equipment, such as printer ink and cartridges or computer software, is considered allowable business expenses and can be claimed back.
Additionally, there’s also tax relief available while working from home – this can be claimed through the government website, which allows you to check your eligibility beforehand.
Events
Everybody loves a Christmas party and company events, but did you know that they are tax-deductible? Yes, that’s right – you can claim expenses for business events. The rate you can claim back is £150 or less per head. This includes other annual events, such as Easter parties or end-of-year celebration parties.
Memberships
Certain memberships that are used for business purposes can be classified as an allowable expense. These could include memberships in professional associations, such as The Law Society or networking groups.
Accountant Fees
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 an HMRC enquiry that proved to be due to fraud or negligence, then you can’t claim them back.
Vehicle Hire
If you hire a vehicle exclusively for business purposes, then you can claim the expenses back from your tax return. 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.
Mileage
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:
- 45p per mile for up to 10,000 miles
- 25p for each mile after
It’s important to note that if you ride a motorcycle, then you can only claim 24p per mile.
The figure you claim includes petrol and general wear and tear on your vehicle. Additionally, you can claim parking costs. However, you can’t claim parking fines, as this classifies as an infraction of the law.
Computers
Computer consumables, as well as hardware, can be deductible expenses. Again, they must only be used 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.
Training
Training sessions can be most beneficial for employees, helping to improve their knowledge surrounding a certain topic. The cost of training courses used for employees or business purposes can be claimed back.
If you take personal courses that aren’t related to your business, then you won’t be able to claim them. The cost of training is generally only valid when it can be beneficial to the business or role, or if it’s essential training.
Professional Services at LJS Accounting Services
Whether you need assistance during your self-assessment tax return or require advice as you start your business, rest assured that LJS Accounting Services can help. Our trusted team of tax professionals has a wealth of knowledge and experience to offer, having helped a diverse range of clients.
Our services can provide you with a better understanding of claiming tax relief. Additionally, our services can be tailored to you as opposed to your company as a whole – we offer personal services where we can help you prevent late filing penalties or explain simple topics like how income tax works in greater detail.
To learn more about how we could help you and your company, please don’t hesitate to get in touch today. We look forward to hearing from you.
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.
