So, you’re officially registered and trading — beyond the birthing pressures of starting a new company. And as you approach your obligatory Self-Assessment returns, you’re asking yourself the money saving question: “What can I claim on tax?” This article outlines a number of things you need to consider to help you reduce your tax bill!
Self-Assessment Explained
However, in order to slash your tax bill, it’s important to understand what comprises Self-Assessment and how you should register for Self-Assessment by deadline. Essentially, Self-Assessment is short for the “Self-Assessment tax return” and most business owners (self-employed sole traders, limited company directors, shareholders and LLP partners) are obliged to send their returns to HMRC each year outlining how much they have earned and from where they earned that income.
Depending on the amount of profit your company made in the previous year, the amount of taxable income may be higher or lower than previously returned. For this rather fickle fiscal reason, you’re permitted to offset some of your Self-Assessment tax bills by claiming a number of business expenses on your Income Tax Return.
Therefore, we’ve compiled the following list of expenses that could assist in your money saving venture and answer the golden question: “What can I claim on tax?”
1. Travel Expenses
“What can I claim on tax for mileage?” If your business practice involves travelling, it’s advisable to claim a mileage allowance as part of your Self-Assessment return.
If you drive a car or a van for work-related needs (for example, a mobile company or a field sales individual) you’re allowed to claim 45p off your tax bill for every mile you travel up to 10,000 miles. However, you can only claim 25p for every mile beyond the 10,000 miles.
So, let’s say you drove 11,000 business miles last year, that means you’ll be entitled to claim £4,500 (for your first 10,000 miles) and £250 for the additional 1,000 miles; therefore, a total sum of £4,750 can be claimed. However, motorcycles expenses must be claimed at a lesser rate of 24p per mile.
Additionally, you’re allowed to claim the following travel expenses:
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2. Office Equipment
“What can I claim on tax in relation to office supplies?” A simple observation of your remote work desk will display a number of claimable items, including:
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3. Legal Fees
“What can I claim on tax regarding professional help?” If you’ve hired a professional such as…
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4. Marketing Expenses
“What can I claim on tax in relation to marketing?” Marketing your business is crucial and its related costs can often be extensive. Hence, it’s vital you claim marketing expenses when it comes to Self-Assessment.
HMRC permits the following marketing related business expenses:
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5. Outstanding Invoices
“What can I claim on tax with unpaid invoices?” This is often the least exploited consideration for saving on your tax bill. Business owners should be readily claiming outstanding or “unpaid invoices” as a viable business expense.
When your business uses traditional accounting, HMRC permits claims for all the money (included in your company’s turnover) that is not going to be received by your business. This is labelled “bad debt”. However, in order to claim this expense, you must ensure that your company will never process/receive the payments for these invoices.
Unpaid debts cannot be claimed for the following:
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6. Clothing Expenses
“What can I claim on tax regarding clothes and attire?” Although you’re not permitted to claim the expenses on your entire clothes wardrobe, you can claim expenses on the following:
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Subscription Costs
Mortgage and Utilities Expenses
Employee Costs
Council Tax
Charitable Donations
The £208 Deduction
