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What expenses can I claim against my taxable income?

We’ve been eagerly awaiting a Budget for several months, but we hadn’t anticipated a change in Chancellor. You can’t predict anything in politics these days! However, I am anticipating many changes in the Budget, especially as the Government has a good majority and this is the first in the likely five-year life of this Government.

Whilst we’re ‘kicking our heels’ now with eager anticipation, after the Budget we’ll be poring over the detail, as there may well be things that need considering and putting in place before 5 April 2020.

In the meantime, it’s useful to consider whether there are things that we can do to minimise our tax in the current tax year (and yes, it won’t be long before the 2020 tax return is due!).

One of the most common tax related questions I’m asked is: ‘What expenses can I claim against my taxable income?’ I always start by saying that the general rule is to consider whether an expense is ‘wholly and exclusively’ for the business, which is the term that HMRC use. Often this is quite clear-cut, but there are many expenses that may have a duality of purpose, and it’s a matter of coming up with a reasonable proportion between business and private use.

Travel

Travel from home to your workplace (where you do business) is not tax allowable. For business travel by a motor vehicle, ideally you need to record your business-related miles in a diary or an app. You can claim 45p per mile up to 10,000 miles per year and 25p after that. For motorcycles, the flat rate is 24p per mile. If you’re a sole trader, you can claim actual vehicle expenses, but you need to be able to split the costs between business and private. Again, a mileage log is the best way to do this.   

Additionally, you can claim parking, hire charges, tolls, train, bus, air and taxi fares, hotel rooms and meals for overnight trips.

Working from home

You can use a simplified method for claiming for business use of home:

Hours of business use per month Flat rate per month
25 – 50  £10
51 – 100 £18
101 or more £26

There is a more complex method based on actual costs, but this is often not much more beneficial in terms of the amount you can claim.

Clothing

You can’t claim for everyday clothing, but you can claim for a uniform, protective or specialist clothing needed for your work, and costumes for actors or entertainers.

Legal and financial costs

You can claim for the cost of accountants, solicitors, surveyors etc., for business purposes. Professional indemnity insurance is deductible.

Bank and other financial charges

You can claim for bank and credit card charges, interest on bank and business loans, hire purchase interest, and leasing payments.

Marketing and subscriptions

You can claim for advertising, samples, website costs and sponsorship. You can also claim for trade or professional journals and trade body or professional organisation membership, if related to your business.

Training

You can claim for training that helps improve the skills or knowledge you use in your business. However, you can’t claim for training that
helps you start a business or expand into new areas of business.

Things you can’t claim for

Some other things you can’t claim as expenses for tax purposes are:

  • Donations to political parties
  • Fines
  • Gym membership
  • Entertaining clients, suppliers and customers
  • Donations to charity

This isn’t an exhaustive list and there are many items that are and are not allowable or are potentially dual-purpose, so if there’s another expense that you think you may be able to claim, just ask your professional advisor, or, of course, I’d be very happy to advise you.

If you have any queries or would like more information, you can contact me on 01473 833411 or peter.glading@larking-gowen.co.uk

This article is designed for the information of readers. Whilst every effort is made to ensure accuracy, information contained in this article may not be comprehensive and recipients should not act upon it without seeking professional advice. “MHA Larking Gowen” is the trading name of Larking Gowen LLP, which is a limited liability partnership registered in England and Wales (LLP number OC419486). Where we use the word partner it refers to a member of Larking Gowen LLP. © MHA Larking Gowen.

Peter Glading

Author: Peter Glading