Whether you are a sole trader, start-up enterprise or fully fledged market leader, the world of non-taxable expenses can be a mystery without the help of a professional accountant. Getting to grips with what you can and can’t claim through your business can be the key to cutting your tax bill dramatically.
Here at Hurren & Co Accountants we provide our client base with the expert advice and support that they need to handle bookkeeping and tax returns with confidence, and have compiled an essential guide to taxable and non-taxable expenses.
What is a Non-Taxable Business Expense?
There are a wide ranging list of expenses that are non-taxable and can be claimed through your business. However, generally speaking any expense that is needed for the running of your business is classed as non-taxable and is subject to relief.
Day to day running costs such as office maintenance, phone bills, utilities and postage are allowable business expenses, whilst equipment hire, not purchase, can incur relief. If you enlist a legal or accounting professional to handle your business finance affairs this will also be a non-taxable business expense.
Separating Personal and Professional Expenditure
Personal expenses are taxable, so keeping your work and home life firmly apart is the key to reducing your tax bill on your next return. For many professionals, especially sole traders and start-up companies, keeping personal and professional finances separate can be quite the challenge but the following tips will help you take control of your financial future effectively…
• Open another bank account and use this to process all business transactions
- Keep your credit card usage purely professional to streamline record keeping and make it easier to achieve tax deductions
- Take extra care with cash transactions, which can easily bridge the gap between personal and professional expenditure. Never take money out of your own pocket to pay for business services, instead have a cash drawer or petty cash system in place
- Make auditing a breeze by accounting for all miscellaneous expenses.
Claiming for Travel Expenses
Whether you are claiming for yourself or on behalf of an employee, travel expenses for business related journeys are allowable. Travel from home to work however is not claimable. There are a number of guidelines when claiming for travel and company cars, and it is essential that you consult an accountant or tax advisor to ensure you are getting the deductions you are entitled to.
Working from Home?
If you are a sole trader that using their home as a base for business, then part of your rent or mortgage could be subject to tax relief. This relief is based on the amount of space you dedicate to your business, and the square footage that this space takes up defines what level of relief you are entitled to. If your home office is used partly for business and partly for personal use, you can claim a percentage of your rent or mortgage back.
For further advice on tax relief and returns, contact our friendly team today 0191 251 7599 or email firstname.lastname@example.org.