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Claiming expenses: What You Can And Can’t claim

November 28, 2017

One of the things I get asked the most is what can I actually claim for when I work for myself ?. Its not black and white but there are clear rules for claiming and any good accountant should be maximising what you can claim in order to bring your tax bill down or your repayment up. Here’s a few of the headlines :

    1. Vehicle expenses claimed either by keeping all motoring receipts including fuel and applying a business use % or by keeping a full mileage log of business miles taken by date and journey. The mileage claim can be beneficial if the total business miles exceed 10,000 per annum. Bear in mind that HMRC can ask to see MOT mileage details so mileage should always be supportable. Don’t forget that any expenses such as toll road, congestion charge or for some trades valeting can be claimed on top.
    2.  One other option is that with a limited company it can pay for the purchase and running of the vehicle but the director will need to complete an annual P11d to reflect personal use of the asset
    3. Use of your home as an office

This really is the stuff of pub talk on a Friday night. Basically HMRC allow a use of home charge at £18 per month when business owners spend more than 37.5 hours per week in their home office.

Business owners can use space in the garden to construct an office or convert a garage or room. The rules are normally that these expenses of conversion are not claimable but if for example the separate area of the home is separately metered then this running cost can be claimed along with specific office furniture and consumables.

Directors can also decide to rent space back to their companies at a market rent but be careful here because this can impact tax free status of sale of main residence and its taxable income on the director.

Travel, Entertaining and subsistence

Starting with the easy one, everyone has to eat so lunches are not allowable as business expenses. Coffee’s with networking colleagues or for business development are claimable. Breakfast and evening meals are allowable when staying away from home and breakfast after very early starts are okay.

Hotels or reasonable rental accommodation are allowed along with transport costs such as rail or tube.

Come in to Beans in Crewe and we will talk you through the do’s and don’ts and set you on the right path because we care that we get it right for you first time.