The majority of small business owners and managers are aware that if you run a business you can legitimately reduce your tax bill by claiming for all tax-deductible expenses.
The amount saved can be considerable and it is worth making sure that you have claimed all that is legitimately allowed by HMRC, who list just about everything that can qualify as an allowable business expense.
One obvious business expense allowance area is business travel.
If you're going by car or van you can claim 45p a mile for your first 10,000 miles and then 25p for each one after that.
If you're going by motorcycle it's 24p a mile and if you're environmentally minded and cycle to work you can claim for bike travel too - at a rate of 20p a mile.
You can only claim mileage for privately owned vehicles.
Items that are essential to the running of your business can be claimed for such as office equipment and consumables.
If you run a limited company and have a laptop, you can purchase it off yourself through the company.
This will make it a company asset and its cost is a claimable expense.
On top of that, you'll get money straight from the company personally tax free.
If you happen to work from home, you can claim on rent and bills by charging some of the costs through your company, although there are limitations but HMRC can provide guidance on this.
The amount of rent you can claim is based on the space dedicated to actual business.
For example, if you have a room as an office that you use only for business purposes, which takes up 10% of the square footage of your home, you could claim 10% of your outgoings such as rent and energy costs as expenses.
If you work in a room for half the time and use it as a normal room the other half of the time, you're likely only to be able to claim 5% of the rent back.
Please be aware that dedicating a room purely for business purposes may have capital gains tax implications when you come to sell your house.
Energy and phone bills work in a similar way and need to be divided between those used when doing business and when not.
Having a dedicated internet and phone business account for example may make claiming a business expense simpler.
Capital allowances includes things like machinery, gifts of equipment to charity and business fixtures and fittings.
You can't claim for the ongoing running and use of some of these things and so instead you must claim for the one-off purchase or gift payment.
For larger capital expenditure items, claiming on these as business expenses might need to be spread over several tax years.
If you do want to claim, obviously you're going to need proof of the expenditure. Retain all your invoices, receipts and papers, keep them in good order and store them somewhere safe to save time when evidencing your expense claims or defending a claim.
HMRC can come back and request proof of expenses up to six years after they're claimed, so keeping organised expense records is a must. If you're unable to give proof when asked by HMRC later on, you might have to pay the money back!
The expense claiming process is not too demanding but if you are unsure about claiming for any particular expense contact Ellis & Co on 01244 343504.