As an accountant, I work with lots of different businesses on a day to day basis but what every business has in common is the fact that at some point they were all a start up (including myself). Starting out in business is not only a huge gamble but a minefield of red tape and legalities to wade through, let alone all the different hats a business owner has to wear, particularly when starting out; we need to be marketers, sales people, administrators, bookkeepers, the list goes on. The most common questions I get asked by new business owners is: ‘What do I have to do?; Who do I tell?; What can I claim?; How does it all work?’
Ok, I know it has been a long time since I posted the first 2 parts of this article on Record Keeping- What you need to know but I am here now and hope this helps some of you out with understanding what expenses are allowable for tax purposes.
The final topic on record keeping I wanted to tackle was expenditure, what you can and cannot use against your tax. There are many misconceptions as to what expenses are allowable and which are not. Some of the common questions I get asked are below:
Travel expenses: Depends on the circumstances
- Petrol Costs – Yes if not claiming mileage but must be restricted for the personal use element
- Mileage – yes for business mileage only (ie to and from a meeting but not to and from the office)
- Car Insurance – Yes if not claiming mileage but restricted for the personal use element.
- Train/Bus Fares – Yes if travelling to a meeting, conference or other business purpose
- Car repairs & Maintenance– Yes if not claiming mileage but restricted for the personal use element.
- Meals when away on business
- Parking/speeding fines – No as a general rule but there are some exceptions where it is for an employee and they are taxed appropriately
- Client Entertaining – No
- Staff Entertaining – Yes to a small amount (£150 or less per head, be an annual party Xmas party, open to all employees) you may however need to report it on a P11D. Employees earning less that £8,500 pa do not need to be reported.
Use of Home as Office- see HMRC simplified expenses calculation
- Gas & Electric – Yes if apportioned in an appropriate manner
- Interest on your mortgage– Yes if apportioned in an appropriate manner
- Cleaner– Yes if apportioned in an appropriate manner
- Insurance– Yes if apportioned in an appropriate manner
- Council tax– Yes if apportioned in an appropriate manner
- Repairs– Yes if apportioned in an appropriate manner
Mobile Phone – Yes for a business element or in entirety if used only for business purposes
Gifts – Generally No, however, small gifts that include advertising is normally allowed (ie USB stick or branded sweets etc)
Professional Subscriptions – Yes if it directly relates to your business
- Purchase cost – depreciation/capital allowance for the year provided it is apportioned for personal usage if there is any
- Interest on finance agreement – Yes if not claiming mileage but restricted for the personal use element.
HMRC Guidance: Private & Personal Expenditure Toolkit
As an accountant one of the most frustrating things to happen is to have clients bring their information in at the last minute for calculation and submission of accounts and tax returns to the relevant authorities. As a business owner, I know that remembering all the relative deadlines for submissions can be confusing and difficult to remember. I would like to try to take some of the mystery out of these dates and deadlines.
If you are self-employed, a director of a limited company, partner in a partnership or Limited Liability Company, you will need to submit a Personal Tax Return to HMRC for each tax year which starts on the 6th April. The submission deadline for that return along with the final payment and your first payment on account (POA) for the next year is 31st January following the tax year end. (Ie. your tax return for 5th April 2014 will be due at HMRC by 31st January 2015)
Hello and welcome to my first ever blog post!
I thought it might be nice to break the ice by telling you a bit about me and my background as a first posting, I hope you do not mind. I will try to keep future postings on the topic of ‘Simple Bookkeeping & Business Advice’ as promised in the page headline. So here goes….