Can You Claim Funeral Expenses on Your Taxes
Last updated: 3 Nov 2021
There are so many allowable expenses you can merits to legitimately reduce the corporeality of tax yous pay. Nosotros've rounded up 12 Self Assessment expenses that you may be unaware of.
Running your own business isn't always easy – especially where accounting is concerned. As a business owner, you'll take a range of reporting regulations and requirements to fulfil for HMRC and Companies House on behalf of your visitor. Merely what some aspiring entrepreneurs may not realise is that, when you start your own business, you likewise need to register for Self Assessment.
Cocky-employed sole traders, limited company directors, shareholders, and LLP members are all obligated to send Self Cess tax returns to HMRC every yr – and based on their earnings, about individuals will demand to pay Income Tax and National Insurance Contributions on their taxable income.
The amount you owe will vary dramatically, depending on how much profit you lot fabricated the previous revenue enhancement year. Fortunately, the UK Government appreciates that running your own business concern can be expensive. That's why y'all're immune to deduct the cost of some of these business expenses from your turn a profit, thus reducing the amount of tax yous owe through Self Assessment.
To help you to start saving money, take a look at our list of Self Assessment expenses you can claim confronting your tax bill.
1. Role supplies
If you're having trouble finding business concern expenses to claim on your Self Assessment return, you don't accept to wait any further than your desk-bound.
HMRC volition let yous to claim a range of expenses pertaining to office supplies, including:
- Your desk-bound phone
- Your mobile phone
- A fax machine
- Stamp costs
- Business stationery
- Printing costs
- Printer ink and cartridges
- Whatsoever computer software that your business uses for less than 2 years
- Any reckoner software your business organisation uses and makes regular payments to renew the licence
You can fifty-fifty merits for your laptop, tablet, or domicile computer – but only insofar as it's used for concern. That means if you lot have purchased a family unit figurer in the previous tax year that you lot're only using for business 50% of the time, you can only claim the cost of that computer every bit a business expense on a pro-rata ground.
For some bigger items like computers and expensive software, you may find you lot need to claim these expenses as capital allowances.
2. Donations to charity
Did y'all give money to clemency last year? If and then, you should exist challenge those donations as Self Cess expenses on your taxation render.
All donations made by individuals to registered charities or community apprentice sports clubs (CASCs) are 100% tax-free. This is called revenue enhancement relief, and how it works depends upon how yous choose to donate funds.
Typically, charitable donations are either fabricated through:
- Souvenir Aid
- Directly from your wages or alimony through a Payroll Giving scheme
- Land, property or shares
- Your will
This tax relief means that if yous donated £one,000 to a registered charity concluding yr, and you're a higher charge per unit taxpayer, you lot can claim back £250 of that donation on your Self Cess form.
Charitable tax relief rules also utilize to sole traders and partnerships, but not for donations made on behalf of express companies.
iii. Mileage costs
Do you travel as function of your business organization? Yous should exist claiming a mileage allowance as role of your Self Assessment render.
If you lot bulldoze a car or van for work, you can claim 45p off your revenue enhancement neb for every mile travelled up to 10,000 miles. Later that, the amount you can claim is reduced to 25p.
For instance, if you drove 11,000 business miles concluding year, you lot're allowed to claim £4,500 in Cocky Cess expenses for your start 10,000 miles, and £250 for the other 1,000 miles – leaving yous with the ability to claim £four,750.
Motorcycles are slightly less, at a flat rate of 24p per mile when using simplified expenses.
While you're thinking about mileage permitted, it's also worth looking at the other travel expenses you tin can merits on your Cocky Assessment return.
Commanded business concern expenses include:
- Vehicle insurance
- Repairs and servicing
- Fuel
- Parking
- Hire charges
- Vehicle licence fees
- Breakdown cover
- Train, bus, air, and taxi fares
- Hotel rooms
- Meals on overnight business trips
That existence said, information technology's worth noting y'all cannot claim for non-business organisation driving or travel costs, fines you lot incur while driving, or any travel between your abode and your regular identify of work.
4. Legal and financial costs
When calculating your Self Assessment expenses, y'all should also include whatsoever costs associated with hiring an accountant, solicitor, surveyor, architect, or whatsoever other professional y'all've paid to assist you lot.
Likewise, you tin can claim costs for professional indemnity insurance premiums – as well as a range of other banking company and insurance costs. Allowable expenses include:
- Bank, overdraft and credit card charges
- Interest on banking concern and business organisation loans
- Hire purchase interest
- Leasing payments
- Alternative finance payments such as Islamic finance
If yous're using cash basis accounting, exist enlightened that you are but allowed to claim upward to £500 in interest and bank charges on your Self Assessment class.
You're non allowed to merits any legal costs associated with buying holding or mechanism, although if y'all employ traditional bookkeeping, you can claim for them as capital letter allowances instead. Like to travel expenses, y'all are also not permitted to claim any legal or fiscal costs yous've been forced to incur past breaking the police force.
five. Unpaid invoices
This is one of the near beneficial (and unused) Self Cess expenses you should be claiming equally a business possessor. If you are using traditional accounting, HMRC allows you lot to claim for any amount of money included in your turnover that you aren't planning to receive. This is known as a "bad debt", and the only real prerequisite for including information technology in your expenses is that yous must be sure that these invoices will never be recovered from a customer in the futurity.
You aren't immune to merits for any unpaid debts that:
- Are non included in your turnover
- Are related to the disposal of fixed assets, such as land, buildings, or machinery
- Are not properly calculated
It'south also worth noting that bad debts cannot be claimed on your Self Assessment form if you're using cash footing accounting. This is because you've non received the coin from your debtors and considering cash basis bookkeeping only records income on your return that y'all've really received.
6. Marketing costs
Another Self Assessment expense that business owners frequently forget to claim is the cost of marketing their business concern.
HMRC will let you to claim business organisation expenses for:
- Any advertizing you lot've washed in newspapers or directories
- Bulk mail advertizing (or "mailshots")
- Whatsoever costs associated with costless samples you lot've produced and distributed
- Website hosting and maintenance costs
Yet again, there are a few exceptions to the rule. You are not permitted to claim for entertaining clients or suppliers, or outcome hospitality expenses as part of your almanac Self Assessment return.
7. Clothes
You're non allowed to claim the contents of your entire wardrobe as an allowable expense, simply there are certain items of clothing you can claim to reduce your Self Cess tax bill at the end of each fiscal year.
Permitted vesture expenses include:
- Work-related uniforms
- Protective clothing needed for your piece of work
- Costumes for actors or entertainers
Unlike travel expenses, you're allowed to deduct the entire cost of piece of work-related clothing from your profits on your annual revenue enhancement bill.
Unfortunately, y'all can't claim for everyday outfits that you choose to wear to work. To qualify as a business organization expense, they've got to exist necessary, work-specific items of clothing.
8. Staff costs
If you use permanent workers, seasonal employees, or contractors to help you run your business organization, you can merits a broad range of expenses associated with their employment when filing your Cocky Cess render, including:
- Employee and staff salaries
- Bonuses
- Pensions
- Benefits
- Agency fees
- Subcontractors
- Employer'due south National Insurance
- Business-related preparation courses
At that place are a couple of staff costs HMRC does not view every bit a permitted business expense. For instance, you are not allowed to claim costs associated with a nanny or childminder as an expense.
9. Subscriptions
Are y'all subscribed to whatsoever professional bodies or trade publications that straight feed into your task? If so, so you lot can claim the costs of those subscriptions equally Self Cess expenses.
Permitted expenses include a subscription to whatsoever trade professionals or academic journals. Likewise, a subscription or annual membership of a professional person organisation or a union will too apply as a permitted expense.
Please notation that any payments you brand to a political political party do not count every bit claimable subscriptions. Besides, you can't claim personal subscription expenses like a gym membership or a glossy mag.
Information technology'due south likewise worth noting that you should not claim donations y'all've made to a charity as a subscription – even if yous're donating on a subscriber-level membership. These expenses can be tallied up equally charitable donations, which have their own set of rules.
10. Your mortgage and utilities
If you work from home, y'all've got a whole range of Self Assessment expenses y'all should exist challenge – although, just similar your family calculator, there are a couple of crucial caveats you need to bear in listen when claiming habitation expenses.
You can claim a proportion of your gas, electric, water, broadband and telephone bills as allowable expenses when working from home. However, y'all must calculate how much of each neb actually applies to your business.
For instance, if you work from a five-room house (kitchens and bathrooms practise not count equally 'rooms'), and one room is used exclusively for business purposes, you can claim 20% of your almanac bills equally Cocky Assessment expenses on your tax render. The same rules apply to your mortgage interest (but non capital repayments) or annual hire costs.
If the room serves another purpose (e.yard. a spare bedroom) or you merely piece of work from home one day a week, for example, you need to apportion the costs associated with that room according to business use. HMRC does not provide exact guidance on how this should be washed – y'all simply need to apportion the costs between business concern apply and private use on a 'fair and reasonable' footing.
It's worth bearing in mind that, if you sell your home, Uppercase Gains Revenue enhancement will apply to the part of the belongings used for business, unless it serves a dual purpose. For this reason, it's best to avoid using a room in your domicile solely for business purposes.
11. Quango tax
A lot of Cocky Assessment users tend to forget about council revenue enhancement when calculating their concern expenses for the twelvemonth. But in the same way that you're permitted to count a portion of your mortgage interest/rent or utility bills against the cost of your tax bill, you tin also factor in office of your council tax beak.
The aforementioned rules apply regarding how to calculate the amount you're immune to chalk up as an expense. If your home role accounts for xx% of the infinite in your belongings, then you are allowed to claim up to 20% of the cost of your quango tax on your annual Self Cess taxation nib.
12. Flat-rate simplified expenses
Of all the Cocky Assessment expenses yous should be claiming on your almanac tax return, simplified expenses is the easiest. HMRC allows for a no-quibble, apartment-charge per unit deduction for sole traders and partners in business organisation partnerships who piece of work from habitation for at least 25 hours/month.
These deductions amount to £26/month (2020/21 and 2021/22 tax years) when working from home for at least 101 hours each month – which subsequently amounts to an almanac deduction of £312 that yous tin can include every bit Self Cess expenses on your tax return. For the 2019/20 tax year, the maximum flat-rate deduction was £4/calendar week (£208/year), or £18/month (£216/year).
The flat charge per unit does not include broadband or telephone expenses, and then you can merits these costs in improver to the simplified apartment fate.
Whilst simplified expenses are quick and piece of cake to include on your Self Cess revenue enhancement return, you may observe that you're missing out on the opportunity to deduct more concern costs from your tax beak. HMRC'south online expenses tool volition help y'all to make up one's mind whether information technology's ameliorate to merits simplified expenses or calculate the actual costs of working from dwelling house.
The bottom line
At the end of the mean solar day, there are loads of perfectly reasonable Cocky Assessment expenses that HMRC will be willing to take as role of your tax return – especially if you're using simplified expenses. That beingness said, information technology's crucial that you are able to bear witness these expenses are valid.
That means you need to go on records of all of your business expenses as proof of your costs. You do not need to send those records in every bit proof of expenses when you submit your Self Cess tax return, and chances are no i will e'er inquire to see them. Just if HMRC does choose to wait into your accounts and asks to see proof of your expenses, yous should always have them to paw.
That's 12 of the best Self Assessment expenses you lot should be claiming – but if you need more guidance, you'll find loads of how-to guides and useful data on the 1st Formations web log.
And if y'all've got any questions relating to company formation, delight become in touch and we'll be happy to aid!
Source: https://www.1stformations.co.uk/blog/12-self-assessment-expenses-you-did-not-know-you-could-claim/
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