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Claiming office expences


Claiming office expenses

Claiming expenses is a tricky issue for many people. For those just starting out in the world of business, the distinction between allowable and non-allowable costs can be hard to fathom, while many small and micro business owners simply don’t have the time to investigate what they can claim for and how to go about it.

This is unfortunate because claiming expenses can make a big difference to your tax bill – especially if you’re a small business.

What is an allowable cost?

According to HMRC, limited companies can only claim expenses that are “wholly and exclusively” for the purposes of your business. In other words, any expenditure that has more than 1 purpose and not directly used to help your business activities is not likely to be deductible against your tax bill.

Take travel expenses for example. You are able to claim travel costs for employees that have to travel as part of their job (visiting clients, attending conferences etc.) because this is an expense solely for the benefit of the business. This is quite different to your business paying an employee’s air fares for a 2 week holiday in Mauritius, which of course has nothing to do with the business and is therefore a non-allowable expense.

Can I claim office costs?

The simple answer is: yes. You won’t have to pay tax or national insurance on products and services you buy for your office (as long as they’re necessary for your employees to do their jobs). This includes:

·         equipment such as computers, desks and chairs

·         utilities such as electricity, water and rent

·         stationery

·         internet and telephone connections (make sure the contracts are in the company name)

·         software and licenses.

The rules are different if you have employees that work from home, where homeworking expenses can be expanded to include equipment and services as well as household expenses such as gas or electricity charges.

How do I claim?

You must report all your expenses (along with the benefits-in-kind you give to your employees) at the end of the tax year.

The forms you’ll need to submit will depend on how much your employees earn. You’ll need to fill out a P11D form for those that earn more than £8,500 and a P9D for those that earn less. You can download these from the HMRC website.

The easiest way to do this is by either using payroll software or HMRC’s online services. We can advise you on purchasing accounting software that will cater for your needs.

Top tips:

·         You won’t have to report some business expenses to HMRC (such as phone bills). This is known as a ‘dispensation’.

·         Remember to keep an organised record of all invoices and receipts that you intend to claim for. Claiming for costs that you can’t then prove could land you in trouble with the Revenue.

·         Note that there are different rules for reporting expenses that depend on the type of expense that you’re claiming. Give us a call if you’re unsure about your obligations.

Get in touch

We know that claiming expenses is a complex area of taxation - that’s why we’re here to help. From calculating your expenses to keeping your paperwork in check, we can handle every aspect of your expenses while netting you a tidy tax saving in the process.

Contact us on 01628 631 056 or email tracya@knightandcompany.co.uk to find out more.