Knowing which expenses can be claimed as a business expense can be tricky, so we have offered a simple guide to help, especially now that HMRC is clamping down on self-employed expense claims
The tax office is launching a new campaign to make sure the 12 million self-assessment taxpayers aren’t claiming for personal expenses. This follows a successful trial that brought in over £27 million in extra tax revenue.
HMRC is using technology, including digital campaigns and AI, to close the “tax gap” and ensure everyone pays the correct amount of tax.
The new campaign will focus on checking that sole traders, partners, and landlords only claim for business-related expenses. This includes making sure that ‘dual purpose’ expenses, which are for both business and personal use, are split fairly.
Seb Maley, CEO of tax insurance provider, Qdos, commented: “HMRC is doing more to close the tax gap, clamp down on non-compliance and ensure people pay the right amount of tax.
With this latest news, the 12 million people in the UK filing self-assessment tax returns need to take note: the government is casting its net wider and stepping up its compliance efforts.
Along with dissuading people from doing so, HMRC is clamping down on those who file
personal expenses in a bid to reduce their tax bill in a non-compliant way.
What can you claim for?
For an expense to be tax-deductible, it generally has to be incurred wholly and exclusively for your business. The good news is, if only a part of an expense is for your business, you can often claim for that specific part. Just make sure you have records (like mileage logs) to back up your claim and that you use the same method each year.
A quick guide to some common expenses:
- Vehicle expenses: You usually can’t claim the cost of travelling between your home and your main place of work. You can claim for business-related travel, though. You can find more detailed rules on this here: BIM37600
- Travel and subsistence: You can’t claim for the cost of your everyday meals. However, if you’re travelling for business outside of your usual routine, you can claim for meals and accommodation. You can read more about this here: BIM47705
- Use of your home: If you work from home, you can claim a portion of your household costs, like rent or utilities. You should base this on the percentage of rooms or floor space you use for work. Find the specific rules here: BIM47800
- Training: You can claim for training courses that update or refresh your existing skills, but you can’t usually claim for training that gives you a new skill or qualification. More info is available here: BIM42526
- Entertaining: Costs for entertaining clients are generally not tax-deductible. The rules are laid out here: BIM45000
Simplified expenses
If you’d rather not calculate all your expenses, you can use a simplified flat rate for things like your vehicle costs and using your home as an office. You can find more information on this here: BIM75000.
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