This is a question we hear A LOT! What are claimable expenses? What can I claim back?
Self employed people can deduct certain claimable expenses from their turnover to reduce the amount of profit they make, and therefore the amount of tax they have to pay.
However there is always confusion around the expenses.
Ultimately the test that HMRC use is to ask if the expense is “wholly and exclusively” for the purpose of running the business.
Example: A beauty therapist can claim for beauty products she uses e.g. face creams. A bookkeeper cannot claim for face creams as they have no relation to her work.
The type of business is important when asking this question. Obviously the types of expenses that a retail shop will have are wildly different to those that a hairdresser will have. There is therefore no definitive list of claimable expenses as they differ so much between businesses.
As a bookkeeper I have a car that I use to go to clients premises and work. However I also use that same car to take my children to school and to go shopping. I use the car for both private and business use. I claim the business use against income. The same applies to other equipment that has a shared use between your private and business lives.
I have come across people in the past who believed that because they work from home they could have claimable expenses of their mortgage, council tax etc. Whilst there is an element of this that is claimable, obviously you also use your house to live in, not just work in.
HMRC introduced Simplified Expenses to solve this problem. This is a way of applying a flat rate to home premises that are used for work, or vehicles with shared use. More information can be found on this topic here.
There is also some useful guidance for claimable expenses here.
We would love to talk in more detail about your business and the expenses that you can claim. Please just contact us