A guide to claiming business expenses

You are here: Home » News & Views » A guide to claiming business expenses

Image for A guide to claiming business expenses

Claiming business expenses is an effective way to reduce your corporation tax bill. However claiming expenses in compliance with HMRC regulations can be a tricky process to navigate if you have never done so before. Below we will take a look at why, how and when you should be claiming business expenses.

Why claim business expenses?

Limited company expenses are subtracted from your revenue, which in turn helps to calculate your company’s profit and the corporation tax you are due to pay.

Tax deductible expenses must be ‘wholly and exclusively’ used for your company itself; it cannot include any expenses that could be deemed personal. Company expenses can include any number of things including salaries, business insurance, premises, business equipment, company vehicles, even social events for your staff (as long as the cost doesn’t exceed £150 per person).

Generally, gifts or hosting clients will not count as a business expense and cannot be claimed back.

How to claim business expenses?

Once your expenses have been deducted, you can then submit your tax return. Typically this will be taken care of by your Chartered Accountant, who will also ensure it is submitted accurately and on time.

To claim back your business expenses you must ensure you retain any receipts, invoices or paperwork in relation to the expense itself. These must be kept in your files for a minimum of six years after filing your tax return as HMRC has the right to investigate within this time period.

When should you claim business expenses?

Your business expenses will be claimed each year when submitting your Self-Assessment Tax Return. Proof of expenses do not need to be included within your return but, as mentioned above, should be held within your records as proof should HMRC request it.

Looking for support in claiming business expenses? Get in touch with the team at Ellis & Co. Chartered Accountants today on 01244 343 504.