Sole Trader
Sole traders incur many running expenses on a daily basis. Fortunately, many of these can be claimed as tax deductible expenses for sole trader:
Accountancy fees – You can claim deductible expenses on business accountancy fees, as long as your accountants’ time was utilised working on your company’s sole trader accounts only and not personal items (like the HMRC Self Assessment, for example).
Accommodation expenses – Claim full tax relief on any accommodation you used to stay while traveling on business, provided that those expenses are not excessive. While HMRC may question so as to why a 4 or 5-star hotel stay was needed, this doesn’t mean that you must make do with a cheap and rundown motel.
Business mileage – If you’re using your own personal transport for business purposes, you can claim these rates, but only if it’s a temporary work location and not your everyday work location:
- Cars and Vans – 45 pence per mile on the first 10,000 miles for the tax year and 25 pence on every mile higher than 10,000.
- Motorcycles – 24 pence per mile for the first 10,000 miles during the tax year and 24 pence for every mile above 10,000.
Ensure that you have receipts for everything and that you record your mileage down in a notebook or daily log.
Fixed assets (office furnishings and equipment) – Any kind of permanent fixture, fittings or furnishings that’s deemed necessary for everyday business operation is eligible for tax relief. For instance, tables, chairs, bookcases, cabinets, computers, printers, software, etc.
General office supplies – Minor purchases which are needed only for maintaining the performance of your day-to-day business activities can be claimed as a deductible expense. This may include computer consumables like printer toners, office stationery and postage.
There are many more deductible expenses in the UK you can claim as a sole trader. Our expert tax accountants at R Johnson can help guide you on which ones you can claim.
Limited Company
Whether you’re an established limited company owner or just starting out, there’s a good chance that you’re paying a higher than normal tax, which can often be claimed as deductible expenses for limited companies:
Accountancy fees – You can claim tax deductible expenses for the complete cost of your limited company’s accounting fees, as long as your accountants’ time was spent working only on the company’s accounts. Therefore, any time spent on non-company affairs, such as preparing a personal tax return, cannot be claimed as ‘tax deductible expenses for limited company UK’.
Accommodation expenses – If you’re traveling to a temporary location for business, and as long as those traveling expenses are reasonable, as opposed to ‘excessive’, you can claim accommodation expenses. However, HMRC may question deductible expenses claims you make for staying at expensive hotels where you used more than a single bedroom.
Business mileage – Using a personal vehicle to travel to a temporary workplace and not your regular one, means you can claim expenses for the petrol used throughout the journey. The following rates apply:
- Cars and vans – 45 pence per mile for the first 10,000 miles for that tax year and 25 pence per mile for distances over 10,000 miles.
- Motorcycles – 24 pence for distances under and over 10,000 miles for the tax year.
- Bicycle – 20 pence for distances under and over 10,000 miles for the tax year.
Equipment expenses – Anything that you’re using on a daily basis to run the company is eligible for tax deductible expenses for a limited company. This includes software, hardware office furnishings, desks and chairs, etc.
Expenses or fees for forming your company – All costs associated with setting up your limited company are naturally business expenses and automatically qualify for tax relief. So this may cover anything from printing and office supplies to all the equipment and machinery you use for day-to-day business operations. Any mandatory formation costs or accountancy fees you have paid or will pay can also be claimed as tax deductible expenses.
This list is not comprehensive, however, as there are many other expenses you can claim as a limited company. Our R Johnson tax accountants can provide further guidance.
Umbrella Employees
As an umbrella employee, you can claim tax relief on expenses which you have incurred exclusively while performing your contract work. Here’s a concise list of deductible expenses in the UK that you can claim as an umbrella employee:
Travel expenses – While traveling to and from your temporary workplace by car, you can claim up to 45 pence per mile for up to 10,000 miles and 25 p per mile for distances over 10,000 miles, for the given tax year. This allowance covers gasoline, insurance, servicing, car tax or any other running costs.
For motorcycles, you can claim 24 pence for every business mile travelled, and 20 pence per mile, if you travel by bicycle.
Secondary accommodation expenses – If you are attending any work-related training or travelling on business, where you’re required to stay at an address which is not your permanent one or your temporary business address, you can claim accommodation expenses.
Your umbrella company will require receipts which include the hotel’s name, address and contact number.
PIEs – An abbreviation for personal incidental expenses, any incidental overnight expense such as telephone calls made to your home or the cost of the morning newspaper, can be claimed up to £5 a night.
Professional subscriptions – Any subscriptions you have to professional and trade associations means you can claim expenses, but only if the said membership is relevant within the scope of your employment. Not only that, but the HMRC must recognise these subscriptions as being eligible for income tax deduction.
Subsistence expenses – These are expenses which arise throughout the course of the business trip as a result of the contract work you are carrying out and namely include food, drink and accommodation.
Fax, stationery and postage – It is also possible to claim deductible expenses on income tax for any costs incurred in terms of sending or receiving fax, photocopying, printing, postage, stationery, etc. The cost can be claimed through a self-assessment tax return but must be clearly shown that they were incurred only as a result of your day-to-day duties.
For more information on what expenses you can claim and how to make those claims, please get in touch with our tax consultants now.
Other Employees
As an employee of any company, you may be wondering whether there are deductible expenses for taxi drivers in Uber or, say, tax deductible expense for doctors or if claiming expenses for lunch is even possible.
When it comes to claiming tax deductible expenses in the UK as an employee, you can only claim tax relief if:
- You are using your own money to buy things which you must use on the job
- You are only using those things for the sake of your job and not anything else
However, you can’t claim tax relief if the company gives all your money back through reimbursements or provides an alternative such as a different laptop model to compensate, as opposed to the very same one you bought with your own money.
If you are a PAYE-paying employee, here are some of the expenses you can claim via a self-assessment form:
Special clothing and tools – Working conditions in certain industries require protective clothing or specially outfitted protective gear along with specialised tools. These include building and metal working industries where you are required to wear special uniforms and protective gear on a daily basis.
You can claim expenses on the cleaning, maintenance or replacement of all such items, but not on the initial cost of acquiring them. But this only holds true if your employer hasn’t already compensated you for these costs.
Professional fees and subscriptions – Tax relief can be claimed on membership fees, professional fees, subscriptions, etc. only if they are necessary or perhaps beneficial to your work in some shape or form. In order to be entitled to any tax relief in this regard, your organisation must be on this HMRC approved list.
Landlords
As a landlord, you can cut down your tax bill by claiming deductible expenses for rental property in the UK – expenses which you typically incur while letting out your property.
This may range from furnishings, legal and professional fees to office costs, travel and subsistence, and motor expenses.
While we can’t discuss all of them at length owing to the limited page real estate we have, we can definitely share an example or two with you:
Travel and subsistence expenses – When it comes to deductible expenses on buy to let property, any travelling done via bus, taxi or train to go see your property, as well as hotel stays and meals in restaurants become automatically eligible for tax relief.
Office expenses – If you are a landlord who does his/her admin from home, as many do, you can claim deductible expenses against a flat HMRC-approved rate of £4 per week.
The different kinds of tax deductible expenses in the UK that you can claim within a specific occupation is a very broad subject in itself and the list we’ve discussed in this article is by no means comprehensive.
There are many occupations which are eligible for tax relief via deductible expenses UK and within each occupation, there are multiple expenses which can be claimed.
In order to help you navigate effortlessly through this maze of tax deductible expenses and determine exactly how much tax relief you are entitled to according to the nature of your work or occupancy, our friendly and responsive tax accountants are only a phone call away.
Get in touch with us today and get all your tax related matters in order!
