What Business Expenses Can I Claim?
From stock and staffing costs to travel and training courses, there are lots of everyday outgoings when you’re running your own business.
Understanding the allowable expenses you can claim can help to reduce your tax bill when you file your taxes. Once these expenses have been deducted from your turnover, you’ll pay tax on the remaining amount, which is your taxable profit.
You can’t claim expenses if you’re using the £1,000 tax-free trading allowance. The trading allowance only applies to individuals and not to limited companies. Unlike sole traders, if you’re running a limited company, you need to follow different rules. As a limited company, you can deduct business costs from your profits before tax and then must report any item you use personally as a company benefit. Once you have deducted your allowable expenses and paid your Corporation Tax, you
will need to decide how to extract the remaining profits.
What is the difference between a business expense and capital allowance?
Capital allowance is an expenditure that you can claim against your taxable profit. If you buy an asset that you keep for use in your business, such as equipment or business vehicles, you can deduct some or all of the cost of the item from your profits before tax. This is known as plant and machinery and the Government website lists what you can and cannot claim for. Any capital allowances claimed by a sole trader must be apportioned if the asset, for example a business vehicle, is used both for private and business purposes. Only the allowances relating to the business use can be claimed.
FSB Expenses Claim Log
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