Q: Managing business expenses in your new company

smallbusiness 28/07/2016

What expenses can I claim through my business?

Expert Answer

In reality, the easier question to answer is ‘what expenses can't I claim through my business’! Every type of business has different expenses, and without recording them all, it's difficult to know which ones can and which ones cannot be claimed.

In general, if you are operating as a limited company, you can claim expenses which are ‘wholly and exclusively’ for your business. These can include purchases of stock, rent, stationery, computer equipment... the list goes on and on. If you are a sole trader, there is a small change to the wording, and expenses must be "wholly, exclusively and necessarily" for your business. It's a subtle change, but one worth noting.

Many business owners forget to claim expenses which they incur when they are paid by cash or other means rather than through the bank account. It is imperative that all expenses are claimed, and a good accountant should then help you identify which ones should be disallowed for tax purposes. Such disallowable expenses include client entertaining - both VAT and corporation tax deductions are unavailable for costs incurred entertaining prospective and existing clients.

There are also some other expenses that might not seem immediately apparent, such as allowances for the use of your home as an office, and capital allowances. By taking advice in relation to your own affairs, you can make sure that you claim the expenses that you are entitled to.

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