Expenses You Can Claim
Clothes for work are a very grey area but here we give you some very useful tips.
HMRC argue that of the clothes that can be worn day to day have a “duality of purpose” in technical speak, what this means is they have a personal and private use even if you don’t wear them for private purposes HMRC argue the clothes are not “exclusively” for the business and therefore not a business expense. If you can prove the clothes are kept completely separate for business as a starting point e.g. you are using these as a costume for a performance then we would argue that these are a business expense. We have in fact dealt with one tax enquiry case HMRC where HMRC accepted the fact that the client kept all her performing clothes in a completely separate wardrobe which HMRC accepted were an allowable business expense.
We would apply the same arguments to props that you might use and again it’s very much question of being able to prove that you keep these completely separate from any personal items. Clothes and other items for attending rehearsals are generally not tax deductible unless they are specifically required to be able perform so ballet shoes for a dancer for example.
HMRC’s notes on clothing as an expense for the self employed can be found here and HMRC state that “you cannot claim for everyday clothing (even if you wear it for work)”.
Business Use of home
You can claim for using your home for work purposes as an expense.
If you only use home occasionally for doing admin and a bit of marketing we would make a claim for use of home as if you were an employee working from home occasionally.
If you work more from home and have a room dedicated to business then you need to calculate your annual costs of your home that would include rent or mortgage interest, (not to the capital part of your mortgage repayment), gas, electric and water bills and insurance . If you use a room exclusively for business and there is no personal enjoyment of the room then you would need to look at this room as a percentage of your total home bills and this will give you the amount to claim per year. If its used partly for business then again % of business use would need to be arrived at.
It’s a question of looking this on an individual basis because everybody’s bills in the home are different.
Phone and computers
An exclusive work phone can be deducted completely 100% from your accounts as a business expense, if you have only one that is also used personally then it’s a question of making a reasonable estimate of the business and private use and claiming the business element only.
Tablets printers and computers are essential tools for running any business these days. These we would generally treat as 100% business as long as any personal use was incidental.
Broadband is one of those areas where we need to split between business and private. The majority of it is probably business, and if there is small element of personal use if it’s minor or incidental then we would ignore it. If it’s included in your TV package then we would make an adjustment to recognise the business use and this is where we advise clients on their own personal circumstances as there is no fixed %.
One option to claim business motoring costs is to adopt the same approach as if you were an employee using your personal car for work purposes. This would mean keeping a note of the business mileage in your diary and then claiming 45p per mile for the first 10,000 business miles and 25p a mile after in each tax year to 5th of April.
The other option is to put your car and all its costs such as fuel, insurance, RFL, repairs through the accounts. The car would attract “capital allowances” which is a % of the purchase price but the rate depends on the exact car.
You still need to keep diary to identify the mileage that is business as opposed to private, e.g. if you do 10,000 miles a year in your car you need to keep your diary to show the business miles. If this was 6000 miles per year then you then you be able to claim 60%.
Either way is acceptable.
Food and Accommodation
If you need to stay overnight or are away on for business, then reasonable food and drink costs should be allowable. Otherwise food and drink costs are generally not tax deductible as HMRC take the view that you have to provide yourself with sustenance. One area often misunderstood is that entertaining is not tax deductible. See HMRC notes here.
HMRC’s notes on travel, food and accommodation as an expense for the self employed can be found here.
You can claim for membership or relevant organisations but generally not such as gym membership or donations to charities.
Accountancy and legal fees for the business are 100% tax deductible.
Bank and Card Charges
These are tax deductible where they relate to the business account or operation of the business
HMRC’s notes can be found here.