How to claim business expenses
If you run your own business, some of the costs you incur to operate can be claimed back as a business expenses. Any expense you claim must be in line with HMRC’s guidelines and legislation. Put broadly, this means that all business expenses claimed should be ‘wholly and exclusively’ related to items that directly apply to your job role and profession.
Why claim Business Expenses?
Any business expenses you incur as part of your work can be reclaimed through your Limited Company, and are taken from your income before Tax and NI contributions are calculated – therefore reducing your tax liability.
However, the rules on what you can and can’t claim can be a little complex, so it’s wise to get specialist advice before you go and spend thousands on some new equipment. If an item is split between your business and personal use (e.g. a mobile phone), you are normally able to reclaim tax relief on the business portion of the cost.
Remember it’s also important you retain your receipts for any purchases to prove they are legitimate. In the event of an inspection, if you do not have receipts HMRC will assume the expense is not a valid company expense.
Allowable expenses to claim
Here’s a quick guide to some of the different expense types you should look to reclaim as an independent contractor working through a Limited Company.
Why is it so important to claim properly?
No one is exempt from the scrutiny of HMRC. If the tax office decides to investigate you then you must co-operate with it. The bottom line is that you could become the subject of the HMRC’s attention at anytime. Therefore it’s important to ensure that you have taken care of all your taxes and expenses in the correct and proper fashion.
Whether you’re new to freelancing or just want to go over some of the finer points with regards to what you’re eligible to claim back, our guide will make things easier for you. Simply click below to download our free guide.