‘What can I claim as a business expense?’ is a common question among freelancers and small business owners. A tax-deductible business expense is a purchase that you can make for your business, that you will not pay tax on when you fill in your self-assessment.
The Telegraph reported that 57% of self-employed people forget to claim on purchases under £10, leading to £24 million lost on unclaimed expenses annually in the UK.
Don’t put your hard-earned extra pennies on tax you need to pay. To help answer the question ‘what can I claim as a business expense?’, this guide will cover eight commonly forgotten costs that you should be aware of when self-assessment season approaches.
What can I claim as a business expense?
Below we’ve listed eight commonly forgotten business expenses you can claim in your tax return:
1) Bank charges
Any interest or charge that is incurred on your banking for business purposes can be tax-deductible. If your current account, credit card or loan account has fees or charges, you should be able to claim those back as long as they are completely business-related. You will have to provide business banking statements as part of your tax return for this to be expensed.
2) Broadband and phone bills
You can claim for Wi-Fi that you are using for business purposes, to save on your tax bill if you are self-employed. Every little helps, and you could claim the business portion of your home internet as a business expenditure, even if you only work from home one day a week. There is a standard £6 per week claim on HMRC, which does not require evidence.
Or you could calculate what proportion of your broadband you use for work, and include it on your claim using your bills as evidence on your self-assessment.
How to calculate your business broadband usage
Follow these steps to find out how much you could claim back for your Wifi:
- Calculate how many hours a week you use the internet, including your evenings and weekends.
- Then determine how many hours you use the internet purely for business purposes.
- Work out what percentage your business usage is of your total, and apply this percentage to your broadband bill.
- This is the total you can try to claim on your expenses. Include monthly or annual bills when you fill in your self-assessment as proof.
This method could also apply to your phone. Many smartphones have a ‘screen time’ report, which can help you determine how often you’re using certain apps or the number of calls. Record any time you use for business calls, social media or email admin, then apply the same percentage technique to your phone bill. Include the percentages in the description when filling out your expenses claim form, using receipts, bills or contracts as proof.
3) Items purchased before your company
If you bought office furniture or computers solely for business purposes, or supplies in preparation for your business venture, you may be able to claim them back as capital expenses.
4) Computing hardware and software
Equipment that you need to run your business can count as a deductible item. You can expense laptops and computers as long as you use them solely for work.
Work-related subscriptions to services like Microsoft Office or the Adobe Suite can also be written off in your expenses, and can often be expensive so remember to include them.
5) Petty cash
Petty cash is the spare coins and notes you may use to pay for small purchases, parking and tolls, or make change for customers if needed. You may be able to claim these as expenses, and by the end of each month, they can become a significant amount you are missing out on. However, be vigilant about recording each purchase by keeping receipts, as they will soon add up. The Countingup app gives you a nudge to take a picture of your receipt after a purchase, so nothing goes unrecorded.
6) Parking, tolls and business travel
When you add up a year’s worth of parking metre costs, you may be missing out on a chunk of tax deduction from your profits.
Nowadays, it’s much easier to pay for parking by card. You can use a business current account to keep track of your parking expenditure and tolls if you travel often for your work. You can usually pay digitally now, but if you use spare cash you can include this in your petty cash expenses.
Remember that you can’t claim any parking at your home address, or costs you incur driving from home to your place of work.
Business trips are also tax deductible, so if you have to travel to a distant city or abroad you can claim back on anything from your hotel bill to meals, including any airport parking or smaller purchases like an Oyster card.
7) Donations to charity
You can claim charitable giving on your self-assessment. If you’ve given to a registered charity or a community amateur sports club (CASCs) you may be eligible for tax relief.
If you donate through GiftAid, or via your wages, you can get this tax-free. This kind of tax-relief applies to sole traders and partnerships but not to limited companies. Always check your status for this type of expense.
8) Marketing costs
If you’ve employed the service of an agency or a freelancer for marketing support, you can claim back their fees as part of your business costs.
Even if you are handling your marketing yourself, you are also able to claim on the costs for the certain types of advertising, such as;
- Newspaper adverts
- Inclusion in service directories
- Email advertising
- Website domain costs
- Costs for producing free samples
You can’t claim for events or entertainment, even if it does perpetuate your marketing activity. Find out more from HMRC to be clear on what is acceptable in this area.
Stay on top of expense claims with Countingup
You can fill in the main body of your tax return (SA100 form) via HMRC, and always consult their advice on supplementary forms, which you can find here, to itemise your expenses and other tax deductible spending.
Ensure you keep evidence of the expenses discussed in this article to shave all you can off your tax bill when it comes to filling out your tax return. Countingup’s business current account and app makes it easy to record the expenses and purchases you’ve made
To find out more about deductible expenses and how to save on your tax payments, download our simple guide to small business expenses here.