With the Self-Assessment deadline passing on 31 January, it\u2019s clear that many sole traders and business owners aren\u2019t using allowable expenses and deductions to their full potential.<\/p>\n
When using Self-Assessment to report your taxable profit to HM Revenue & Customs (HMRC), it\u2019s important to remember that not all your profits are taxable.<\/p>\n
There are inevitably costs associated with running your business, which can be deducted from your total turnover to work out your taxable profit.<\/p>\n
For example, if you have a turnover of \u00a350,000 and claim \u00a35,000 of allowable business expenses, then you\u2019ll only pay tax on the remaining \u00a345,000.<\/p>\n
Some deductions are well known as common business expenses, such as office equipment, staff costs, rental, utility and insurance bills and stationery.<\/p>\n
However, some are less widely known and may mean that you aren\u2019t using allowable expenses to their full potential.<\/p>\n
As the next financial year fast approaches, the following are five allowable expenses that all business owners should understand and use if applicable.<\/p>\n
Certain training costs are accepted as allowable expenses, but they should be approached with caution.<\/p>\n
Training courses or other provisions which help you improve or refresh the skills you use in your business, such as top-up courses to learn about new developments in the industry, can be claimed under Self-Assessment rules.<\/p>\n
What cannot be claimed for are course costs which help you start a new business or expand into a new area of business through your existing operations.<\/p>\n
Clothing is another deduction that can present confusion, so you may have been reluctant to use it in the past.<\/p>\n
You are allowed to claim expenses for certain items of clothing that you use for your business, including uniforms, necessary protective clothing and costumes (if relevant to your work).<\/p>\n
Bear in mind that you can\u2019t deduct the cost of regular clothing, even if you wear it for work. This is not classed as a strictly business expense.<\/p>\n
If you provide yourself or an employee with a subscription to trade journals or membership to an industry organisation that is related to your business, you can claim this as a business expense.<\/p>\n
You can\u2019t claim for certain other regular payments, however, including payments to political parties or non-business benefits to staff, such as gym membership fees.<\/p>\n
An integral part of your operations and growth, certain marketing expenses can be deducted from your pre-tax profit.<\/p>\n
For example, if you choose to have a new website built and hosted externally, or place an advertisement in your local newspaper, this can be deducted as an allowable expense.<\/p>\n
Certain marketing avenues, which tend to be of a higher cost and aren\u2019t seen as a \u2018necessary\u2019 business expense cannot be deducted. This generally includes event hospitality and entertainment for clients or customers.<\/p>\n
If you incur bank costs such as credit card charges, interest or overdraft charges through the running of your business, you can claim these as expenses.<\/p>\n
This includes leasing payments, interest and bank loans and alternative finance arrangements.<\/p>\n
It\u2019s important to note that, if you use cash basis accounting, you can only claim up to \u00a3500 in interest and bank charges as allowable business expenses.<\/p>\n
In the course of your accounting period, you should keep records of all your expenses, such as receipts, invoices and purchase orders.<\/p>\n
When you file your next Self-Assessment return, you should add up all your allowable expenses for that year and list them on your submission.<\/p>\n
You will then be taxed on only the taxable portion of your profits.<\/p>\n
While you don\u2019t have to send proof of expenses with your Self-Assessment return, you may be asked to show proof to HMRC, so keep them to hand.<\/p>\n
For help making the most of allowable business expenses, get in touch with our team. <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" With the Self-Assessment deadline passing on 31 January, it\u2019s clear that many sole traders and business owners aren\u2019t using allowable expenses and deductions to their full potential.<\/p>\n","protected":false},"author":2,"featured_media":5575,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125,31,44,75,26],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5573"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=5573"}],"version-history":[{"count":2,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5573\/revisions"}],"predecessor-version":[{"id":5578,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5573\/revisions\/5578"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/5575"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=5573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=5573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=5573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}