In a poll of more than 500 company owners with five or fewer members of staff, just 26 per cent of respondents say that they believe they claim back every single business expense they incur, while 21 per cent admit that they claim back half of their expenses or less.
Not placing enough value on expenses is the most common reason for people not claiming them, with 41 per cent admitting that they wouldn’t claim back an expense if they didn’t think it was worth claiming, according to research carried out by YouGov on behalf of online accounting provider FreeAgent.
In addition, 35 per cent of business owners admit that lost or forgotten receipts are a major reason for them not claiming back all of their expenses, while 13 per cent say they didn’t claim expenses because they are put off by the admin required to do so.
Some 22 per cent of respondents also say they are worried they would claim back the wrong amount, while 19 per cent admit they didn’t claim all their expenses because they fear being challenged by HMRC.
Only 32 per cent of businesses feel fully confident that they weren’t paying too much tax as a result of not recording expenses properly.
The poll also reveals that nearly three quarters of small business owners and freelancers have wider concerns about their taxes, with 73 per cent of respondents saying that they feel anxiety about the current UK tax system.
Ed Molyneux, CEO and founder of FreeAgent says, ‘It’s clear that expenses and tax are big issues for people who run small businesses. Nearly three quarters of small business owners admit to feeling anxious about the tax system and many of them are also failing to claim back all of their business expenses.
‘This means they are effectively subsidising their own work, potentially paying too much tax and could be losing thousands of pounds.’
He adds that especially worrying is that small business owners aren’t just concerned about claiming back expenses because they think it’s too complicated or they’ll be challenged by HMRC, but they also regularly lose receipts or even just feel that expenses aren’t worth claiming.
