UK’s small businesses Failed to Claim Expense
UK freelancers and micro-businesses are missing out on millions of pounds worth of tax relief from unclaimed expenses they deem too small or time-consuming to put in their accounts, according to new research.
A study recently carried out, found that nearly a quarter of a billion pounds worth of expenses with individual values of £10 or less are being unclaimed by UK micro-business owners every year.
By using an aggregated sample of 2.5 million expenses worth a total of £168m throughout 2015, the survey found that the average micro-business owner has around £216 worth of expenses with individual values of £10 or less every year.
Ignoring sub-£10 expenses
However, in a recent survey of 100 web professionals carried out on behalf of the company, nearly a quarter (22 per cent) of respondents said they didn’t think it was worth claiming any expense that cost them £10 or less. Projected across the UK’s estimated 5 million micro-businesses, this proportion equates to approximately £238m in unclaimed “small” expenses.
The research also revealed that a further 14 per cent of people said they would not bother claiming expenses if they were worth less than £5 – suggesting that the overall amount of expenses actually being unclaimed across the UK could be even higher.
In addition, just 39 per cent of those surveyed said that they claimed back all of the expenses they incurred for their business, while one in every 20 (five per cent) respondents admitted they didn’t claim any of their expenses whatsoever.
‘Be scrupulous about reclaiming expenses’
In order to avoid overpaying tax, all small business owners should be scrupulous about reclaiming their expenses. But it’s surprising how few web designers and developers in the UK actually do claim everything back, and how many ignore or dismiss certain expenses for being so small.
“Whether it’s £5 or £500, that’s all money which you can claim tax relief on, and in the case of the smaller expenses, it’s also money that quickly adds up. We found that nearly one in four micro-business owners wouldn’t claim expenses worth £10 or less – presumably because they’re too small to bother with or it takes too much time to log them – and that suggests hundreds of millions of pounds are going unclaimed across the whole of the UK.
“Even for a freelance business or small agency, those little expenses can end up being worth hundreds, or thousands, of pounds when they’re all combined – so it’s strange that people seem to think it’s too much hassle or not worth the effort to claim these back.”