40 Allowable Expenses You Can Claim On Your Self Assessment Tax Return

welcome back Adam here today I'm going to be running through more than 40 different expenses that you may be able to claim through your business as a soulle Trader to do this I'm going to briefly explain the sort of guiding principle that hmrc used to determine if an expense is allowable or not which you can then use to apply to your own situation I'll then run through 40 common allowable business expenses and finish with a handful of additional expenses to watch out for because they are automatically disallowable before we get into it don't forget to like the video and subscribe for more helpful tax content now of course it is important to only claim expenses which would be considered allowable under tax rules but at the same time it's also important to make sure that anything that can be claimed is claimed otherwise you're going to be paying more tax than is necessary and that's not good for any business so how do you Det determine what can be claimed and what can't be claimed after all each business is different so what might be allowable for one might not for another well the phrase that hmrc use is wholly and exclusively for the purposes of the business or the trade this means that providing the reason for making the purchase was for its use in or by the business then it would usually be considered allowable so let's get started with some of the most common allowable expenses you should watch out out for to get through this in a reasonable time I'm going to group some of these together into categories some of the expenses will be very self-explanatory but some will need a bit of background information let's start with property related expenses first we got rent if you rent any kind of commercial property an office storage a warehouse maybe for your business then the cost is going to be allowable we've also got mortgage interest so same situation where you own that property though provide providing you split the repayments between interest and capital it's the interest element that is going to be allowable we've then got your utilities things like water rates gas and electricity business rates on your commercial property that is used within the business are an allowable expense and insurance in this case I'm talking about insuring your property there are other insurances which will be allowable we'll come on to a couple of those in a minute but again if you're uring a commercial property that would be wholly allowable we've also got security costs so maybe you're paying a third party to look after your property and repairs and maintenance so things like painting decorating fixing leaks essentially where you're replacing like for like just be aware that making significant improvements to your property wouldn't be allowable so things like extensions are ruled out and the final property related cost I've got here is council tax now you might be wondering why I've mentioned council tax after all if you own or rent a commercial property then you're usually going to be paying business rates as council tax actually applies to Residential Properties well if you use your residential property in your business then you can usually claim a portion of the council tax in fact you can potentially claim a portion of the first 10 expenses I mentioned that relate to your residential property now this is actually really common for Soul Traders lots of people will use a spare room in their home to run their business to some extent for some it might be fulltime for others it might be a few hours a week but for most some time is spent working from home so hmrc allow you to claim some of that cost and you might be thinking but my electricity bill isn't wholly and exclusively for my business but the electricity that you use to run your laptop in the spare room is it just happens to have been build alongside your personal use so you would still meet the wholly and exclusively test as you're only going to claim the business element in the case of hom workking you have two options the first is to claim a flat rate allowance based on the number of hours that you work from home hmrc decide the rate they publish them and then you claim them then it's more of a no questions asked policy you don't need to keep receipts you don't need to prove that you actually spent the money the second option is to calculate how much of your usage relates to your business for this I'd recommend using a tool like the one you'll find on our website under the services tab you're going to find a work from home calculator which will help you to calculate what's allowable based on the number of rooms in your house and the amount of hours worked typically this more detailed calculation will result in a higher allowable expense I would also add here that if you want to claim for part of your residential insurance cost then it would be advisible to contact your provider and let them know that you're using your home for business purposes as this may affect your policy we're now moving away from property and on to more admin related overheads first I've got telephone cost so typically we're talking about landlines here mobile phones as always if you're using a phone for business and personal use it would be advisable to disallow a percentage of the expense for that personal element broadband and internet costs are wholly allowable pretty self-explanatory this one postage cost so things like stamps or couriers that you might use for the business stationary costs any printing software and ink cartridges and small equipment and tools now there's no official definition of small here there's no threshold that you might cross from small equipment to large equipment typically it's going to be a judgment call and it's going to depend on the business but if you think about a 20 Shredder that you use in your office that's going to be small office equipment even a 100 pound printer could pass a small equipment if you're a builder a handsaw or a hammer might also fall into this category and would all be wholly allowable then we've got equipment and tools this is really where you're buying something more substantial then could be considered small possibly an expensive chopa if you're a builder a laptop for your home office a piece of Machinery maybe whether or not this is an allowable expense will depend on your method of accounting if you use a cash basis which is a simplified method of accounting available for smaller sold Traders then these expenses will be allowable if you use traditional accounting then these expenses won't be immediately allowable but you will still get some kind kind of tax relief via Capital allowances if you want to learn more about Capital allowances and how they work check out the articles on our website now let's move on to financing and finance related expenditure first I've got interest on bank loans and other types of loans we've got alternative Finance payments such as Islamic Finance bank and credit card charges so we could see things like overdraft fees in here higher purchase interest if you're buying assets over time and lease payments a point to note here is that if you are using the simplified cash accounting method then you're actually restricted to claiming £500 of interest and incidental cost of obtaining loan Finance this means if your business generally incurs more than £500 of this particular expense type then cash accounting may not be the right accounting method to use as some of those expenses would have to be disallowed and we've then got irrecoverable debt now this this one will only apply to those using traditional accounting which makes sense under cash accounting you only recognize your income as it actually gets received into your business so you wouldn't have any bad debts to claim tax relief for under traditional accounting you might have already declared income and paid tax before the money was actually received from the customer so if it turns out that money can never be recovered then it's only right that you go back and you get the tax back essentially next up will be a common one for most Soul Traders this is travel related expenditure these might include car and Van Insurance vehicle repairs servicing vehicle licensing fees things like Road tax Breakdown Cover parking Fuel and possibly even the purchase of a vehicle now the purchase of a vehicle is potentially an allowable expense it all depends on what type of vehicle you're buying and the accounting method that you use if you use cash accounting and you purchase a van that's going to be treated like equipment and it's therefore 100% allowable but if you use cash accounting and purchase a car or if you purchase most types of vehicles under traditional accounting then the actual expense of doing so won't be allowable again you will still usually get some tax relief but you would have to do that through Capital allowances you should also be aware that claiming the purchase of a vehicle as an expense or claiming Capital allowances on it would prevent you from using simplified expenses on your vehicle costs I mentioned simplified expenses earlier in the video when we looked at working from home well hmrc also have a similar option for vehicle expenditure they allow you to claim up to 45 P per mile traveled instead of claiming the actual cost of insurance repairs servicing or fuel so depending on the amount of of business mileage you typically do and the value of the vehicle it can sometimes be beneficial not to claim the cost of the vehicle through your business and instead op to use simplified expenses other allowable travel related expenses might include fairs things like train tickets bus tickets air fairs and taxi fees hotel and accommodation fees where an overnight stay is required and then meals for those overnight trips the final category of expenses covers advertising and professional fees these might include advertising in things like newspapers magazines directories and on websites anything that might help you to sell a product or a service marketing fees such as direct mail sending out free samples and even creating a website in certain situations professional subscriptions professional fees things like accountants legal fees surveyors and then professional Indemnity insurance insurance so that gives you more than 40 examples of allowable business expenses but what about some of the expenses that you should be watching out for as disallowable number one we've got parking and speeding fines which are not allowable for soul Traders at two we've got travel between your home and your permanent place of work now travel to a temporary workplace is allowable but if you have a permanent workplace such as an office or a retail outlet that you travel to every day then that travel is not not allowable hmrc actually have a specific set of rules that will help you to determine if a workplace is temporary or permanent in nature any work clothing that doesn't qualify as protective clothing so if you work in an office and you have to wear a suit that would actually be disallowable whereas protective clothing things like steel toeat boots hiis vests and safety helmets are actually allowable for soul Traders any donations to political parties that automatically disallowable and so is any client entertaining that you might do so there you have it 40 common allowable expenses and five disallowable just remember this is not an exhaustive list and if you're ever wondering if a purchase is allowable just ask yourself is it wholly and exclusively for the purposes of my trade that is all for today thanks for watching see you next time

Channel: GoSimpleTax

Views: 16,203

Keywords: expenses, tax, tax expenses, sa103, self employed, sole trader, freelancer, self employment, self assessment, tax return, self assessment tax return, hmrc, save money

Id: QyuOBbx7DHY

Length: 12min 24sec (744 seconds)

Published: Wed Jan 03 2024