What expenses can you claim against tax

This is one of the most frequently asked questions…what expenses to claim to offset against sales and to reduce the tax bill.

Well if you are an employee the answer is somewhat limited to wholly, exclusively and necessarily incurred costs. But if you are a sole trader then the definition is more widely drawn as just wholly and exclusively.

Staff costs. The costs associated with your employees should be fully recoverable. The pay, benefits, pensions and their travel on work related business.

Rent and rates. All the premises costs should be allowable unless there is a private use element.If you use your home as an office then the Inland Revenue allow a nominal amount. You can claim more but you will need to justify the claim.

Telephone costs. Mobiles and landlines.Should be fully allowable but there are cases where an estimate of private use might be excluded.

Repairs and renewals.Fully allowable but you need to be able to distinguish between a repair and a capital addition.

Professional fees. Usually allowed eg accountants fees. Some costs might be capital and you will only get relief when the asset is sold and then as an increase in the base cost for capital gains tax.Examples being legal fees and any expense to protect your right to the asset.

Printing, postage and stationery. As long as incurred for the business these are allowable.

Entertaining...these are not allowable.

Travel costs – generally are allowed but exceptions cover instances where excess luxury or personal involvement are in play.

Motor costs. Largely allowable but care is needed to identify any capital costs such as depreciation.

Training costs are generally always allowed but there are restrictions for sole traders training for new skills.

You are welcome to contact us for free advice. Wherever you are, Carlisle, Brampton, Penrith or indeed anywhere in Cumbria do call us for advice on tax and bookkeeping.