Accounting Advice

Don’t get caught out by expenses: The perks you can’t put on the business

29 Apr 2016

Expenses are one of the main perks that make the daily stresses of running your own business worth it.

There are plenty of allowances you can claim against your business to reduce your tax bill.

But just as you should know what you can claim for, it is equally important that you don’t get caught out by claims you can’t make.

HMRC has a long list of allowable expenses. Ultimately you can only put through expenses that are wholly for business use and related activities. As soon as items are used on a personal basis you could begin to lose out.

We reveal five expenses you can’t claim for.
  

Travel 

HMRC will let drivers claim a mileage allowance if using a private vehicle for business.

This is 45p per mile for the first 10,000 miles in a year and then 25 p per mile above that.

  
Old-carr

But this is only if you are going out on business and can’t be used for travelling to and from work on a regular basis.

Travel and subsistence rules may let you claim for your journey if you are contracting somewhere, but this only applies if you are working in the same place for less than 24 months.

If you are travelling to the same location for work over more than 24 months then HMRC will treat you as an employee and you won’t be able to use the subsistence rules.
  

Business trip 

Lunch in Paris on a Friday afternoon sounds good and could be a great place to hold a business meeting.

You could even come to the location of our sunny offices in Brighton to iron out your business strategy by the beach.

If the trip is solely for business purposes then it could be claimed as a travel expense. But if you then decide to spend the weekend in Brighton with the family you would lose any relief as the trip would be deemed as personal.
  

Clothing 

Looking the part is an important element for business. But in most cases this will need to come out of your own pocket.

There are some industries where you can claim for the cost of clothing and equipment.

Clothes
  

For example, tradesmen such as builders and doormen or those working with precious metals can claim for the cost of buying, repairing or replacing small tools as well as for cleaning, repairing or replacing specialist clothing.

But if you are just looking for a new suit you can’t claim the costs.

HMRC has a list of professions that can claim for clothing.
  

Entertaining 

Putting lunch on the company card can be tempting, but you can actually only expense it if you are entertaining your own staff.

You can only claim tax relief and VAT if the purpose of the event is to entertain employees. But if any clients turn up and join in this is no longer an allowable expense.

So you can’t expense a client lunch, even if you only talk about work for the whole time.

It is even more tricky if you don’t employ any staff and where it is just you and another director.

You can only expense food and drink if you were away from your usual place of work on a temporary basis, such as on a business trip.
  

Professional membership 

You can reclaim tax you pay on fees or subscriptions to some approved professional organisations - but only if you must have membership to do your job or it’s helpful for your work.

Members-club
  

It is important to check HMRC’s approved list of professional organisations.

For example, journalists can’t expense membership of the National Union of Journalists, while lettings agents can for membership of the Association of Residential Lettings Agents.

In these cases you could argue that the journalist doesn’t need to be an NUJ member to do their job whole being part of ARLA gives a lettings agent respectability and professionalism. 
  

We can help with your expenses 

The best way to claim the right expense is to make use of a decent accountant.

If you want advice on how to claim for the right expenses and minimise tax, give us a call today. We are London accountants offering a full range of tax and accountancy services, from VAT returns to financial planning, and payroll to tax-efficient investment advice.

Give us a call or get an instant quote for our services!
  

Greg Milne

photo

Business Development Manager

0207 043 4000

About the author

Greg came to Accounts and legal as an entrepreneur to help entrepreneurs.

In the final year of his business and journalism degree in Glasgow, Greg launched his first fashion store in his home city in Glasgow at the age of 21. 

For the next 7 years Greg launched 3 different fashion brands throughout Scotland, with locations on some of the most recognisable streets north of the border. Alongside his stores he worked as contributing editor on various small indie fashion magazines and was represented by colours management as stylist and creative director, working with brands such as Anthropology and Marks and Spencer.

  

We can help you grasp opportunities

 

If you’re setting up or running a business, we are full-service accountants offering tax and accounting support from bookkeeping to business plans, payroll to business strategy, growth, exit planning and general business advice.

 

Call our London or Brighton office today or get an instant quote for our services!

 

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