Knowing what to expense and what not to can be a real challenge for a self-employed professionals, working as a Sole Trader, via a Limited Company or Umbrella Company.
While it might be tempting to simply try your luck and see where you get, expensing properly can make a real difference to bottom lines and tax. Consequently, it’s important for people to know what’s what.
So when you’re self-employed, what can you actually expense?
Brookson’s expenses infographic is a great place to start when researching what you’re entitled to and you’re likely to find it’s more than you think.
The basics
There are few fundamental things most contractors are aware that they can expense. Business mileage and fuel is perhaps the most obvious. Under UK legislation, it is possible to claim 40 miles per day, over 20 working days, when traveling to and from the office. This equates to around £360 per month. If you use your car for business, it is possible to claim 45p a mile back on fuel for the first 10,000 miles and 25p per mile after this point. Other transport is also expensable, including cycling, train travel, toll-road charges and flights.
Accommodation when on a business trip can also be put through expenses. This includes hotel costs, food and incidental expenses, such as telephone calls and newspapers.
Another basic expense is equipment and consumables (such as paper and ink). It’s important to find a comprehensive list of what you can and can’t put on your expenses, but you’re likely to find most things can be claimed. This even extends to larger purchases. For instance, if you run a limited company, you can buy a printer through it and make it a company asset.
Lesser-known expensables
Not everything is such an obvious expense associated with your business, so it pays to know what you are able to claim cash back on.
One that there is often uncertainty over is food. While rules vary, through certain umbrella companies it is possible to claim up to £5 if working more than five hours a day, and £10 if working more than ten hours. When on a business trip, food can also be expensed, as long as receipts are kept. Working on the basis of spending £5 per day over 20 working days, this can save up to £100 pounds.
Phone bills can also be expensed. If you’re a sole trader or the phone contract is in your name, all calls relating to the business can be claimed for. You can also claim a proportion of landline costs.
Meanwhile, it is possible to expense training courses. Developing skills is important to ensure you can do the job needed when hired. Consequently, work-related training can be expensed as long as it is essential to the job or required by a client.
Accountancy, insurance and other professional fees can also be expensed. However, through an umbrella company, it is important to remember insurance is included in the margin.
Other expensable fees include accountancy services, legal or professional subscriptions.
Worth the hassle
While some may be tempted not to expense as much as they can to avoid admin, failing to do so could mean individuals are missing out.
Brookson helps to make the process easier, with a dedicated expense team and innovative technology allowing self-employed professionals to take photos of their receipts with their smart phone and easily pair them to an expense claim in their personal online portal Connect.
I am a chartered tax advisor with a specialism in the freelance contractor sector advising contractors on how to structure their affairs and recruitment businesses and end hirers on the effective…
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