In April 2023, the government introduced a rise in corporation tax from 19% to 25% so it is more important that ever that business owners make sure that they fully understand what is classed as a tax-deductible expense and can be included on their tax return. Making sure that all tax-deductible expenses are claimed for can significantly boost the cash flow of a business.
Claiming for working at home
You can only claim for expenses that are incurred wholly from the running of your business. If you work at home, you can claim part of the running costs of your home on business expenses which will save you tax.
HMRC have a flat-rate allowance for individuals who work at home which is £6 per week in the 2023/24 tax year or you can claim proportional expenses.
You cannot claim for things that you would pay whether or not you worked from home. There are various pitfalls when it comes to what you can claim for working at home, book a no-obligation meeting now to discuss.
How should business owners pay for business expenses?
The best way to pay business expenses is through the company bank account. However, they can also be paid through your personal bank account and then reimbursed by the company.
Phone bills
Work phone contracts and work internet bills can be claimed as business expense.
If the phone bill is in he company name and used only for business then you can claim 100% of the bill. If the phone is also used for personal use then you can only claim for a proportion.
Pension contributions
Pension contributions for business owners and any staff members are a tax-deductible business expense.
In April 2023, the annual allowance that you can put into a pension increased to £60,000. This means that you can benefit from tax relief on the eligible pension contribution as well as corporation tax relief.
If you encourage your employees to pay in more to their pension then you will receive extra corporation tax relief.
Work clothes
You are able to claim the entire cost of work-related clothing from your profits. You cannot claim for everyday outfits that you choose to wear to work. You can only claim for items that are work specific.
Claiming travel expenses
Most business owners know that travel expenses are a tax-deductible expense. However, if you use your own vehicle then you need to make a travel claim using the Mileage Allowance Payments set by HMRC regardless of how much the fuel and car maintenance for the journey cost you.
You cannot claim for fuel between your home and office.
Loans and interest payments
If you take out a loan or credit card to secure funding for your business then interest payments on the amount you have borrowed are a tax-deductible expense.
Take financial advice
The above is not an exhaustive list of what can be claimed, for further information please contact us.
The rules and allowances are constantly changing, a financial adviser at Four Wealth Management can help you navigate the tax pitfalls and allowances and make sure that you are making use of all of the allowances you are entitled to.
At Four Wealth Management, we have expert pension advisers who can help you to determine how much you can contribute to your pension each month as this is one of the biggest sources of tax-relief that can be claimed by a business owner.
Book a no-obligation meeting now or call us on 0117 973 0500.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
