If you are self employed there are certain tax relief options available to you. Running costs are a big part of operating a business and you could be entitled to deductions that you weren’t aware of.
For example, if your annual turnover is £40,000 and you claim £10,000 in allowable expenses, then you only pay tax on £30,000. Allowable expenses are the expenses that pertain to your business and do not include money taken to pay for private purchases.
If you have a limited company the rules are different as you can deduct business costs from your profits before tax. You need to report any item you make personal use of as a company benefit.
The costs that you can claim as allowable expenses are as follows:
Capital allowances include:
Note: you cannot claim expenses if you use your £1,000 tax-free trading allowance.
If you use something for both personal and business reasons then this cost can be split so you can claim allowable expenses for the business cost. A typical example of this would be a mobile phone bill.
If you work from home, you are able to claim reductions for costs such as the following:
To enable you to claim for these expenses you will need to find a reasonable method of dividing these costs ie the amount of time you spend working at home/number of rooms that you use for your business.
Your Accountant will be able to discuss all of this with you and accurately calculate the tax deductions that you can claim for your business. We are happy to help guide you, get in touch today.