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Free Guides for new and growing businesses from HRBS - fixed fee accountants and business advisors

Tax deductible expenses

hrbs.biz guide to tax deductible expenses Tax deductible expensesThere is a great deal of confusion as to what you can and what you can’t deduct from your profit for tax purposes.

This tip gives a brief list of the types of expenditure you can claim, some of which you may already be deducting, some may be new to you and applicable to your business.

In general, costs enabling you to run the business and are incurred for business purposes are tax deductible.

Equipment purchased and used by the business receives a tax deduction in the way of capital allowances.

Expenses deductible (a brief list)

  • Costs of stock/materials sold
  • Workwear, small tools etc (construction workers, kitchen fitters etc)
  • Business telephone costs (including mobile phone)
  • Motor expenses for business use (alternatively claim mileage from your business at HMRC approved rates [45p per mile for first 10,000 miles for 2013/14, 25p per mile over 10,000] to minimise paperwork)
  • Car hire or van rental if for specific business use (the mileage rate is not claimable for these trips)
  • Postage, franking machines, courier charges, printing and stationery> eg business cards, leaflets , flyers, postcards, brochures etc
  • Advertising eg yellow pages, local newspapers, Google Adwords etc
  • Computer consumables used for the business eg blank CDs, DVDs, USB memory sticks, and external hard drives used for backing up your records
  • Memory cards, batteries and accessories for your business mobile phone or digital camera
  • Office and printing supplies including inkjet cartridges and toner. Recycled cartridges are also environmentally friendly
  • Bank charges (although try to use a fee free bank account if possible)
  • Broadband used for business purposes
  • Wages and subcontractor costs (not your drawings)
  • Professional fees eg accountancy, book keeping
  • Trade subscriptions
  • Warranties for your PC, Tablet, Laptop, Apple Mac or iMac etc
  • Subscriptions to magazines which are relevant to your business
  • Reference books for business use e.g a2z/maps for business travel, guides for tax saving, writing business plans, business development, presentation and negotiation skills etc
  • 468 x 60 Tax deductible expenses Tax deductible expenses

     

  • Rail fares, bus and coach travel, taxi fares, flights, hotel and subsistence for business trips
  • Rent and rates of business premises eg serviced offices
  • Website development (including domain names and hosting)
  • Use of home allowance if you work from home or do your book keeping at home (a percentage of light & heat, home insurance etc depending upon the proportion of your home used for business)
  • Software annual licence fee (eg Anti virus) , online backup, pc utilities
  • Business and laptop insurance

Equipment

Your accounts may include a depreciation charge in respect of your computer equipment, monitors,  so that its cost is written off over its estimated useful life. However, under current tax legislation, the accounts charge is not tax deductible. Instead you can claim capital allowances, which is effectively depreciation allowable for tax purposes.

Credit cards

As a general tip, if you are using a credit card to pay for business costs, have a separate one in your name for business use, so that your personal expenditure is kept out of the business.  Cashback or Reward cards are ideal, especially if you pay them off in full as the cashback/reward is not currently taxable.

Guide updated September 2013

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