One of the most common questions we get asked here at SK Accountancy is “what can I claim on my tax return?”
So what can you claim? Let’s take a builder as an example..
So what can a builder claim? Let’s start with the basics and probably the most obvious, cost of sales, otherwise known as purchases. These will be any materials the builder has had to incur as a result of taking the job on, things such a cement, bricks, fittings for the project and so forth.
The second most common expense for a builder would be sub-contractors i.e. wages for an employed or self-employed contractors/sub-contractors. If you have subcontractors you will also need to register the business for the CIS scheme.
So let’s run through a whole list of other expenses a builder could claim:
- Fuel costs, fuel used on the job i.e. during the day any activities you need to conduct which involve leaving the site for materials etc can be claimed. The only fuel costs which cannot be claimed for is if you are stationed at one static place for weeks on end as this will be classed a principal place of work.
- There are two ways you can claim fuel. Method one is by claiming the full fuel receipts for any fuel you put into the vehicles/machinery. Method two is by claiming 45p a mile (for the first 10,000) and 25p for miles in excess of 10,000. One thing to consider is if you opt for the second option with the mileage claim, you are unable to claim for any repairs, insurance or any other costs for your vehicles.
- Insurance costs for both public liability insurance and motor insurance (business use only) can be claimed. There may be other variants of insurance which can also be claimed.
- Repairs, repairs to any business vehicles, plant machinery can be claimed as an expense.
- Workwear, this can be a sticking point. Workwear can only be claimed if its sole purpose is for work. You cannot claim any item of clothes which are also used outside of work (personal use).
- Tools, any tools required to complete the job can be claimed, some larger ticket items will be capitalised and depreciated over the suspected assets useful lifetime, i.e. 2,3,4 years.
- Office/storage rent & running costs. If you have office premises in which you pay rent and utility bills, you can claim these against your profits. If you own a commercial building, the mortgage interest can also be claimed. If you do not own or rent office spaces but you conduct some of your administration at home you can claim a small amount of ‘use of home’ costs to offset against profits.
- Telephone/mobile phone/internet costs provided their sole use is for business these can be claimed in their entirety. If they contain some private use, the percentage of private use needs to be determined and added back in against the profit to reduce the cost.
- Purchases of Fixed assets. Fixed assets are big ticket items which have a life span of over 1 year. These will be added to the fixed asset register and depreciated over their useful life span. These can be depreciated via straight-line basis, i.e. the same charge over the course of the expected years of use, or reducing balances basis where the first-year claim will be the peak amount claimed, with subsequent years decreasing as each year passes. Some FA’s can be claimed in full via the Annual investment allowance, which bypasses the need for the cost of the asset to be apportioned over its useful life. Please see HM Revenue & Customs guidelines here for more details on AIA and capital allowances.
- Bank charges on your business bank, any bank charges/interest incurred on your business bank and transactions can be claimed.
- Professional fees any fees such as solicitors, planning fees, accountant fees (many more variants) which are incurred for a business purpose can be claimed.
- Advertising, any business advertising newspapers, leaflets, online marketing can be claimed.
- Website costs, this includes hosting the website and the initial set up/building of the site. These can all go against profits.
- Travel costs, if you are working away and having to stay over night, hotel costs are allowable expenses as are food and drink throughout the days you are away. However there are some guidelines as to how much you can claim per day on subsistence while you are working away. Please see here for HM Revenue & Customs guidelines on claiming subsistence while working away.
There are still yet more costs you can claim but we hope this begins to point you on the right direction, please feel free to get in contact in regard to any questions you may have.