With a home-based business, you can claim back on expenses for a whole range of different items – some things which business owners aren’t always aware of.
When the time of year rolls around to complete your tax return, have a good think about what you’ve spent to run your business. Stationary you’ve purchased, training you’ve attended – these are just a couple of examples.
All of these can be set aside as business expenses, which means you can deduct them from your total earnings without having to pay tax on them.
If you keep good records, claiming back on expenses is well worth it.
There are a wide-ranging list of items you can claim as expenses as part of your home-based business.
Let’s begin with some expenses that you You may know about claiming for petrol costs, but did you know you can claim back on items such as website hosting or the electricity you use in your home?
Here’s a handy guide to some of items that you can class as expenses for your home-based business:
Working from home, some of your electricity, gas or internet will go towards running your business. Lighting and heating a room you work in, powering technical equipment and using the internet,.You can use a proportionate amount of these costs on your tax return to class them as business expenses.
Of course, you can’t claim all of your electricity bill through your business, so how do you work out how much of your bill to claim? Work it out as a percentage.
HMRC suggests that if you have a room in your home that you use as an office, you can work out how much electricity you use and divide this between the number of rooms in your home, for example.
If you work mostly from your living room, you can proportion an amount of electricity used in that room as business expenses, which could be anything between 1-5%. If you’re still not sure, you can always check with HMRC on its website.
Travel for Business
Petrol claims are 0.45p per mile and when you add it together, it can work out quite well – but – you need to be very organised in your approach to evidencing this. Keep a record of mileage and total costs on a spreadsheet – plus the details of the journeys you took and how it was for the purpose of your business.
What many businesses are unaware of is that they can claim for marketing costs to advertise their business or stationery and this can even go as far as to include the costs of setting up and running your website.
Keep the receipts and a record of what all items and, again, how these were used for your business.
Printing ink, pens, paper, staples, paper clips – they are all needed to help you run your business. Use this to your discretion to claim them all back through your expenses.
There is some allowances for training that relates specifically to the job you. It could be a change in law or procedures, which requires you to attend refresher training to update your knowledge, or a skills update. Where a cost is incurred, you can refer this back to your business expenses.
Keep hold of those receipts!
Adding items to your tax return means that, as with any part of your business, you’ll need to keep a record of it – for a minimum of six years.
HMRC may need to contact you at any time about your expenses or ask for proof of these and you’ll need to be ready to prove what you spent and be able to justify how the expenses linked back to and was necessary for your business.
If you’re in any doubt, it’s always worth just checking with HMRC about any of these expenses and what they advise, as procedures can always change.