A guide to claiming legitimate business expenses 

This handy guide to business expenses will tell you everything you need to know about making a claim and how much your employees could be entitled to

According to a survey from The Accountancy Partnership, 81 per cent of small business owners don’t understand what is and isn’t a legitimate business expense.

A significant 65 per cent had failed to claim on an expense in the past, meaning that they lost between £100 and more than £10,000. In fact, 35 per cent lost out on an estimated £100-£499.

Employees can make a claim against their place of work for expenses incurred exclusively as a result of carrying out contracted duties. HMRC defines this form of business tax relief as the use of your personal savings for travel or items you must purchase for your job.

Staff may not use this as an opportunity to claim back money for things they have purchased outside work or money they have spent on things like office furniture, stationery or even company assets if you as an employer have already provided them with an alternative.

So what employment expenses can your staff claim back?

Many people are simply in the dark as to what they can make a claim for and do not ask in fear of getting on the wrong side of their employer. Employees should ensure they are not out of pocket by claiming for expenses they have incurred as a direct result of their contracted duties. Here’s what your staff need to know what they can make a claim for, and exactly how much they could be entitled to.

Mileage and travel costs

If you are in the B2B industry, it’s likely that your employees will spend a large percentage of your time on the road visiting clients, delivering pitches and securing deals. With so much time spent on the road, it’s important that employees are not unnecessarily dipping in their pockets for travel expenses.

For those of you who use your own vehicle or motorcycle to travel to work every day, you could be eligible to claim for Mileage Allowance Relief. To work out how much tax relief you are legitimately owed, add up your business mileage for the year and multiply it by the approved mileage rates.

Tools and equipment

If you are expected to purchase tools in order to carry out work-related tasks, then you too could be entitled to a tax rebate. If you were an employed mechanic, for example, you would have to spend a significant amount of money on tools needed to complete a job, including various sized spanners, sockets, jump leads, spark plugs and other equipment You can usually claim back tax relief worth 18 per cent of the value of these items.

Uniform tax relief

Are you tasked with the laundry and upkeep of a company uniform? If you are required to wash a dedicated work uniform or protective clothing, you can also claim back a working tax rebate for expenses incurred carrying out additional work.

Professional fees

For some jobs it is essential that you sign up to a professional registration and/or a special license that allows you to legally practice your profession. While not mandatory, your employer might advise you to become a member of a professional body. These are both examples of subscriptions that are likely to include an annual payment of some nature and for this you may be entitled to a tax relief.

This list is not inclusive of all work-related expenses you may claim back with tax reliefs available for employees working from home, who may be eligible to claim back expenses for internet charges, telephone calls, heating and more.

How to make a claim to HRMC

So you’ve done your research and are ready to make a claim for employment expenses, but how do you go about it? If you have calculated your allowable expenses at a total of £2,500 or less, you will need to present a written record of all expenses as evidence of your claim.

However, if your expenses exceed the £2,500 mark, you will need to fill in a self-assessment tax return. There are sections within this form that you are required to fill in with details including your mileage expenses, as well as your annual income working for your current employer.

There are various expenses you may claim back using the same form and if your details fit the above criteria, you will be considered for a tax rebate with the approval of the HRMC.

All the areas covered in the article require close attention. You could be missing the opportunity to make a legitimate claim for business expenses or risk getting in trouble with your employer for claiming disallowed items. For this reason, it’s always best practice to seek advice from a professional with expert knowledge and experience in accepted tax rebates.

Compare expense management software

If you want to simplify your company expense process, there’s a number of software tools that could help make life easier for you and your employees.

Compare providers now to find the perfect option for your business.


Further reading on expenses

What expenses can I claim through my business?

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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