What are allowable expenses and how can you claim tax relief on them?

Are you aware of certain business expenses which are entitled to tax relief?

This is particularly true when you’re in a small business. You may be the only individual in your team, which means there’s no source of knowledge to move to when you’re required to know something.

Don’t worry—we’re here to help you.

Computing your tax return can be a challenging task, especially when ironing out the exceptional details like allowable expenses. Our team of tax accountants has come up to simplify the expense side of things for you, dividing down what expenses are allowable, and the ones that aren’t.

How to know whether it’s an allowable expense?

The main question to start off with is how do you know what is a tax-deductible expense and what isn’t?

For any tax-deductible expense, it must have been incurred when you were conducting out the business or trying to entice new business.

Let’s have a look at the most common types. Just take a look at a few disallowable expenses—i.e items that can’t be offset against tax.

Supplies

Supplies are the goods you purchase in to sell to your customers. They’re also the items you use to make goods to sell or goods you’re required to buy to offer a service.

Wages, salaries and other staff costs

Wages, salaries and other staff costs are such costs you’d expect. These are the salaries, wages, bonuses, pensions, employers’ National Insurance contributions, and benefits for staff or employees, agency fees and so on. For example- disallowable expenses include salaries of directors and pension payments.

Travel expenses

This includes a massive range of things. It consists of supervising costs such as car and van insurance, servicing, repairs, fuel, vehicle license fees, hire charges and AA or RAC membership.

It also covers costs when you travel for business on the train, bus, air and taxi fares, meals on overnight business trips and hotel room costs.

Disallowable expenses such as fines, the cost of purchasing a vehicle, travel costs between business and home and meals except those on overnight business trips.

Premises overheads

These are the essentials of maintaining the lights on at your business. It is the business and water rates, rent, heat, light, power, property insurance and security.

If you operate your business from home, you can claim a proportion of the overheads of running your home.

In this classification, disallowable expenses consist of the cost of buying any premises.

Repairs and maintenance

This consists of repairs and maintenance of business premises and equipment. It doesn’t consist of repairs to non-business parts of equipment or premises.

It doesn’t cover up the costs of buying, improving or making changes on the premises either.

Office overheads

These consist of mobile, phone, internet, email and fax running costs. It consists of the stationery, postage, printing, computer software costs and small office equipment.

Business entertainment and advertising

This consists of your business marketing: direct mail, advertising, website costs, free samples.

It does not cover up entertaining clients and hospitality at events or suppliers.

Professional fees

You pay the professional fees to the experts for taking help running your business: solicitors, accountants, architects, surveyors and so on.

Professional indemnity insurance premiums also fall under this category.

Go for Nexa Accountants

HMRC has comprehensive guidance on what includes a tax-deductible expense and what doesn’t.

It is always recommended to get in touch with Nexa Accountants experts for getting a detailed guidance for your particular situation.

Our team would be more than happy to help you answer your queries. Call us on : 020 3004 9303.

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