Our experts at DSR Tax Refunds know how hard it is to find good, quality information about expenses that is easy to understand, and that’s why we have created this handy guide to tell you everything you need to know about allowable expenses. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust. If you think you might be entitled to a refund, check out our handy calculator to see how much you could be able to claim.
What are allowable expenses?
You might be asking yourself what we mean when we talk about allowable expenses? Surely we’re talking about business expenses, right? That’s absolutely correct – we are referring to expenses that you might incur as a part of your job, which HMRC will allow you to claim back. The way you are able to do this is to offset it against the Income Tax that you have paid on your work – so you claim these expenses back as a tax refund. If you are self-employed, you will also be able to offset these against any profit that you make when you fill in your Self Assessment tax return. So, let’s take a look at the areas of expenses that you can claim for.
Motoring expenses or mileage allowance
You can work out your motoring expenses in a couple of ways. The first way is to calculate the proportion of business use for your various motoring expenses such as road tax fund, insurance, fuel, breakdown cover and so on. So, if you use your vehicle for business purposes for approximately 60% of its total usage, that proportion of your motoring costs can be claimed as an allowable expense. If that sounds too complicated, there is a simpler way of calculating motoring expenses and that is to use the HMRC’s simplified expense rates to calculate mileage costs, which are currently set at 45p per mile up to 10,000 miles and 25p per mile thereafter. Make sure you keep good records of your mileage as HMRC might want to see proof that you have put those miles in.
Materials, tools and equipment
If you are responsible for providing your own materials, tools and equipment, you can claim the costs of providing that – including any costs included in hiring, maintaining and servicing.
Clothing and safety equipment costs
If you have to provide your own protective clothing or safety gear in order to complete a job safely and within health and safety regulations, these costs can be reclaimed through your self-assessment return. This includes “hi-vis” wear, gloves and goggles. You can also claim for the cleaning and upkeep of these items.
Travel and subsistence costs
If you have to work away from home as a part of your job, you can claim the costs you incur – such as travel costs, hotel rooms and any meals you have to provide for yourself while you are away from home. You need to make sure you keep receipts though and the costs need to be reasonable, so unfortunately receipts for candlelit champagne dinners probably won’t be accepted by HMRC.
Home office administration costs
If you run your own office from home, you can claim for items like printer paper, stationery, printer ink cartridges as well as a suitable proportion of phone and internet costs dependent on business usage. So, if you use your broadband for business 25% of the time, you can claim 25% of the cost as an allowable expense. That goes for your mobile or landline phone call costs too. You will need to keep records, so you can prove your usage to HMRC if necessary. You can also claim for website costs, or the costs of any leaflets or flyers if you advertise your business in this way
Home office expenses
If you use part of your home exclusively as a home office, heating and related costs can be claimed as an allowable expense too. If you rent separate business premises, you can claim all of those costs along with any utility bills and insurance required.
If you have to shell out for business insurance, public indemnity insurance or accounting fees you can claim for these costs too. You can’t claim for the costs of settling a tax dispute, or for legal fees if you have broken the law, though.
Other expense areas
There are other areas of business expense that might also leave you out of pocket. You can claim for union fees, where necessary or advantageous for the job, as well as bank interest charges for business overdrafts and loans, hire purchase interest and credit card charges where for business expenditure.
Expenses and record-keeping
All of the above expenses are allowable under HMRC rules, but they need to be “wholly and exclusively” incurred up while working – HMRC takes a dim view on people trying to pass off their personal expenses as an allowable business expense. As a result, our experts recommend you get into the habit of good record-keeping – make sure you keep all receipts and invoices as well as a thorough record of your business mileage. You’ll thank us if HMRC ever come knocking, asking for proof!
How can DSR Tax Refunds help?
Our experts know that your time is precious and that is why our friendly team can take all of the hassle out of your tax refund claim. We can fill in the forms for you as well as deal with HMRC on your behalf. We can even get your money back in your account within 21 days, so you’re not left out of pocket for any longer than you should be so call us on 0300 122 9972 and let’s get your claim started today!