If you’ve been in business for a while, you’ll already know that some purchases are tax-deductible, including fuel expenses, travel, etc. However, some items may leave you wondering how you’ve been in the dark for so long!
In this blog, we’re going to share some of the more hidden legitimate purchases that you may not have known were tax-deductible. This article could quite literally save you money! As with anything related to finance and accounting, if you have any questions about your specific situation then please get in touch.\
Mobile phone bills
Let’s start simple. Your mobile phone (which is usually used more for internet than for calls) is a must for your expenses. It’s a completely legitimate claim and you’ll be able to claim back the VAT if you’re VAT registered, too. A mobile phone is a business tool. We bet you use it more for your business than for personal use, too. Most of our clients claim the entire bill and the VAT back, saving them money every year.
As an added bonus, most of those phone bills are covering the cost of the mobile within the monthly bill, so you’re effectively claiming back the cost of a new phone in the process.
Use of your home as an office
Working from home is more common than ever, even now the immediate Covid threat has been reduced. London is reporting a mass exodus from the city and offices as people who worked from home during lockdown opt for a more balanced, less commute-heavy lifestyle.
If you run your own business then this means that you’re using your own heating, electricity and water more often as you’re there more often. There’s a claim for that! Speak to your accountant about this as it can change and will need to take into account your circumstances, but essentially you can claim a certain amount back for your utilities, broadband, and landline bills.
Mileage claims for your personal car
If you’re heading to networking meetings, client visits, or even taking parcels to the post office in your personal car then you’re out of pocket – so claim it back.
Mileage for your personal car – for example, driving to meetings in your vehicle – is an expense so many forget to claim back. This doesn’t count if you have a company car, as you get separate benefits for this, but if you’re using your own car then you can claim 45p per mile for the first 10,000 business miles and 25p thereafter. There are some great apps, eg Tripcatcher, for tracking mileage so you don’t have to do it manually
Depending on the mileage you do, the price of fuel, and the fuel efficiency of your vehicle, this might even pay you more than it costs you.
Back to work – £500 claim
Have you had someone out of work for a while that you’re introducing back into the office or working environment? You can claim up to £500 per employee for the back-to-work scheme to help them (and you) get it right. This can be used for medical appointments such as a chiropractor if somebody has been off injured, or for other activities/treatments directly linked to their wellbeing and recovery on returning to work.
Staff gifts
You can offer gifts (physical items or vouchers) of up to £50 to your staff. While the maximum value of each gift can only be £50, you can gift employees as often as you fancy and for any reason – hitting targets or just because you want to reward some great work. These are tax-deductible so you still have to pay for them but they can come directly off your profit margins, reducing your overall tax burden. They can’t, however, be used as an alternative to remuneration so they need to be gifted in addition to your employees’ salaries.
Many directors use these themselves as well as for their employees. Sadly for the directors, you each have an annual limit of £300 per year so no more than six gifts of £50. Still worth it, though, as they are tax-free to the director and tax-deductible to the company.
Party time!
Looking to celebrate? Hit a target or signed up a brilliant new client? Staff parties can be a great way to show your appreciation and you can claim back tax on up to £150 per year, per employee.
This can (and usually does) go towards a Christmas party but it can also be split between events across the year. A good accountant will look for opportunities to apply this to events/occasions that you’ve had even if you’ve not specifically had a Christmas party or similar. Let them know what you’re up to and they should be able to offer bespoke advice.
Software invoices, please!
Subscriptions such as Zoom, Audible, and relevant courses can also be claimed against tax. If you’re VAT registered you’ll also claim back the VAT on these is applicable, too. In many businesses, software like Xero, Zapier, Calendly, Zoom, and other software is running the show – so claim it back as a legitimate building block of the business.
We’re always surprised how many of these you can pick up over time and it can make a real difference to your monthly/quarterly profit and loss. Those £20 subscriptions (£140 a year x 5 = £700 for example) soon add up!
It pays to have a good accountant
We’re always surprised how many of the above claims aren’t being claimed against tax paid to HMRC. These are not tricks or dodgy loopholes – they’re valid business expenses that are there to ensure the smooth and profitable running of the business. The use of a mobile, personal car to travel to meetings, and software are essential for business development.
Having a good accountant means that you’ll always claim for everything that you’re entitled to as they’ll be on top of the latest from HMRC and they’ll look for ways to save you tax. It’s what we do best.
Need help understanding your tax deductibles? Drop us a message now and we’ll have a call. We’re here to help with tax as well as other accounting services.
