Just one in five micro-business owners say they claim back all of the expenses they incurred for their business, finds a study.
Some 21 per cent of respondents say they claim less than half of their small business expenses, with 10 per cent admitting they claim ‘hardly any’ or none of their expenses, according to a poll by accounting solution company FreeAgent.
In addition, a quarter (25 per cent) of micro-business owners surveyed say they would not bother to claim an expense if it cost them up to £5, while a further 19 per cent report they would not claim anything worth up to £10.
This can significantly add up given that in 2014, FreeAgent logged a total of 2.1 million expenses worth a combined total of £146 million.
The survey of more than 500 micro-business owners/sole traders also reveals that the main reason micro-business owners haven’t claimed back an expense is that they don’t think they’re worth claiming, with 37 per cent of respondents admitting this.
Other reasons for not claiming expenses include losing or forgetting the receipts (30 per cent of respondents), not wanting to face the admin involved (12 per cent) and worrying that HMRC will challenge them (11 per cent).
Ed Molyneux, CEO and co-founder of FreeAgen says, ‘In order to avoid overpaying tax, all small business owners should be scrupulous about reclaiming their expenses. But it’s surprising how few people actually do claim everything back, and how many ignore or dismiss certain expenses for being so small.
‘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. Before too long, those little expenses can be worth hundreds of pounds, so it’s strange that people seem to think it’s too much hassle or not worth the effort to claim these back.’