Purchase of Stock for re-sale

Cost of goods bought for resale, cost of raw materials used; direct costs of producing goods sold; adjustments for opening and closing stock and work in progress; commissions payable; discounts given are allowable.

Salaries, wages etc.

Salaries, wages, bonuses, pensions, benefits for staff, employer’s NICs etc are allowed to be deducted against your income. Remember, you cannot claim your own salary or drawings as a deduction from your income.

Business Premises

You are allowed to deduct the costs of maintaining your business premises as a tax expense.  These may include rent, rates, heating, lighting, repairs and insurance.

Use of Home as Office (UOH)

If you are working from home, a proportion of the costs below can be claimed as a deduction.

  • Lighting
  • Heating
  • Cleaning
  • Insurance
  • Mortgage interest
  • Council tax
  • Water rates
  • General maintenance

The proportion should be based on the floor area or number of rooms used for business, and the proportion of the time it is used for business if it is not for exclusive use.

Mileage / Car Expenses

If you are self-employed, you can deduct the cost of using your car, motorcycle or bicycle for business purposes.  You can claim car and van insurance, repairs, servicing, fuel, parking, hire charges, vehicle licence fees, motoring organisation membership etc.  Where a vehicle is used solely for business purposes, you can claim 100% of the invoiced costs – but be sure that there is absolutely no private use element.

The most common method of claiming motor and travel expenses is to claim a fixed rate for each mile travelled on business, using HMRC’s standard, fixed mileage rates

The standard rates applicable for tax year 2011 – 12 are:

  • 45 pence per mile for the first 10,000 miles in the year and
  • 25 pence thereafter.

This covers all costs relating to the use of the vehicle – fuel, road tax, insurance, repairs and so on.

Sub-contractor costs

Cost of hiring a sub contractor in your business, is an allowable expense.

Fares / Hotel costs / Subsistence

Train, bus, air and taxi fares incurred for your business trips are allowable as a deduction.  Similarly hotel room costs and meals on overnight business trips can also be claimed as a deduction.   Subsistence costs can be claimed only if you are away on business and they are reasonable

Advertisement Costs

Advertising in newspapers, directories etc. mail shots, free samples, website costs are allowable as a deduction.

Entertainment Expenses

Only that element which specifically relates to subsistence for your staff can be claimed.  Annual Christmas party and other similar staff-only event costs can also be claimed provided the cost per head per year does not exceed £150. If this limit is exceeded, the whole benefit is taxable for the party or event.

If your staff parties include their partners, only the element relating to your staff is allowable i.e 50% of the actual cost subject to the limit specified above is allowable.

The European Courts have ruled that entertaining of foreign customers is allowable and this ruling is binding on all member states.

Training

Includes the training & courses you need to maintain your existing qualification. Any courses that provide a new qualification would unfortunately not be allowable.

For example if you incur costs to qualify as a Plumber, the cost would be disallowed. However as a Plumber if you go through various training courses to maintain the qualification, it will be allowable.

Accountancy

Any accountancy fees that you pay to your accountants are an allowable expense. The same applies to professional fees.

Other Administrative Costs

Such as –

Phone and fax running costs,

Postage,

Stationery,

Printing,

Small office equipment costs,

Computer software etc

Can be claimed as allowable expenses.

Subscriptions

If your business involves you joining a professional or trade body – for example if you are a plumber – you may be able to deduct the cost of joining the appropriate professional association.  You may also be able to claim tax expenses for the purchase of trade or professional journals or subscriptions.

Finance Charges

Interest on bank and other business loans, bank overdraft and credit card charges, hire purchase interest are allowable.