Personal Tax: What expenses can we claim?

Today, we will tell you what expense claims can be made for your Personal Tax Return.

Previously we talked about that, pencil in the aorta time, tax return season.

I get loads of clients saying, Mahmood, we’re putting our accounts together. What can we claim?

The Tax Return

We will be focusing on personal tax returns that have to be completed for individuals for the tax year 2018-19.

The tax return will include income and capital gain transactions between the 6th of April 2018 and the 5th of April 2019.

In this blog we’re going to look at some of the expense claims for tax returns businesses can make.

Self Employed: What can be claimed?

For the self-employed, tax is based on business profits; Exactly what does this mean? Well at its most basic, it’s the difference between what you invoice and what you spend.

As a rule, focus on what your business does, let that guide you. What you spend on making money from that business is fair game. When we say making money, we’re talking making profits.

If you’re an artist then stage clothes, props, rehearsals and travelling to gigs is claimable. Where you are a speaker, then money on travelling, hotels, food and drink is fine; When your business makes dog clothing, then the cost of materials, advertising, visiting trade shows is fine.

General Rule

The general rule is that any costs claimed must be for business purposes only, advertising, office rent, and accounting fees are good example. A trip to Disney to destress and meet Micky is needed but is not a business cost.

Sometimes things get a little bit fuzzy. “Can I claim this?” gets a reply of “well, that depends”. The cost of normal clothing, that’s trendy T-Shirt, is no good. However, stick a logo on it and it becomes a claim. When we catch up with clients, network, talk to suppliers then a cappuccino and cake goes down a treat. Seems sensible to claim this cost, think again, because HMRC sees this as entertaining. However, turn that catch up into a meeting and you can claim it.

The cost of “Armani jeans as protective clothing for a painter and decorator’ has been turned down as ‘bonkers‘.  Similarly, Pet food for a Shih Tzu guard dog has been rejected. The cost of breast implants, and a mechanical bucking cow have been allowed.

Shared expenses are where costs are a mix of personal & business. Mobile phones and computers for example. By concession, HMRC allows you to claim the bit that relates to your business. It’s typically between 0% and 100%.

If you spend money make on equipment such as PCs, vans, and machinery then you should be able to claim the whole cost immediately.

It may not be a good idea to claim the complete cost straight away. Let’s ramp it up and consider the bigger picture. How much profit you have, personal allowances, tax rates, and how profit you need to show all come into the mix.

Simplified Expenses

If your business is below the VAT limit, then you can forget about adding up receipts and bills. Claim certain expenses using scale rates, known as the simplified regime.

This simplified regime only applies to sole traders and partnerships. Limited companies, sorry but you can’t use this regime.

Two main areas that the simplified regime applies to is

• Transportation
• Working at home

Mileage claims

The rates allowed for use of a car or a van is 45p per each business mile traveled, up to the first 10,000, and then 25p per mile thereafter

If you use a motorbike or motorcycle, then you can claim 24p per business mile travelled.

If you use a bike, then you can claim 20p per business mile travelled.

The mileage rates cover the costs of fuel, insurance, repairs at your mate Daves body shop, and the cost of the car.

Working at home

The scale rates are based on the number of hours you work at home.

For example, if you work on average 25-50 hours per month then you can claim £10 per calendar month, if you work in excess of 101 hours at home, the rate goes up to £26 per month

Working at home covers you working on, and in your business. Watching cat videos doesn’t strictly speaking cover this. However, research is research.

Scale rates v actual costs

Which one is better? Well do the numbers and see what’s better for you.

Word of warning, the devil is in the detail. For example, claim mileage rates for using you can’t switch to actual costs the following year. You change method when you sell the car


However, if it feels too daunting to know what expense claims for tax returns to make, then contact us and we can de-daunt it for you.

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