Nearly £250 million worth expenses with individual values of £10 or less are being unclaimed by UK micro-business owners every year, according to a study by FreeAgent.
By using an aggregated sample of 2.5 million expenses worth a total of £168 million that were logged by customers in FreeAgent throughout 2015, the company finds that the average micro-business owner has around £216 worth of expenses with individual values of £10 or less every year.
However, in a recent survey of 100 web professionals recently carried out on behalf of FreeAgent, nearly a quarter (22 per cent) of respondents said they didn’t think it was worth claiming any expense that cost them £10 or less.
Projected across the UK’s estimated 5 million micro-businesses, this proportion equates to approximately £238 million in unclaimed ‘small’ expenses.
The research also reveals that a further 14 per cent of people say they would not bother claiming expenses if they were worth less than £5, suggesting that the overall amount of expenses actually being unclaimed across the UK could be even higher.
In addition, just 39 per cent of those surveyed say that they claim back all of the expenses they incurred for their business, while one in every 20 (5 per cent) respondents admit they don’t claim any of their expenses whatsoever.
Ed Molyneux, CEO and co-founder of FreeAgent says that, in order to avoid overpaying tax, all small business owners should be scrupulous about reclaiming their expenses.
‘But it’s surprising how few web designers and developers in the UK actually do claim everything back, and how many ignore or dismiss certain expenses for being so small,’ he adds.
‘Whether it’s £5 or £500, that’s all money which you can claim tax relief on, and in the case of the smaller expenses, it’s also money that quickly adds up.
‘We found that nearly one in four micro-business owners wouldn’t claim expenses worth £10 or less, presumably because they’re too small to bother with or it takes too much time to log them, and that suggests hundreds of millions of pounds are going unclaimed across the whole of the UK.’
Even for a freelance business or small agency, those little expenses can end up being worth hundreds, or thousands, of pounds when they’re all combined, Molyneux adds, making it strange that people seem to think it’s too much hassle or not worth the effort to claim these back.
Further reading on accounts and tax
