We're now well into new tax year and the early birds are getting in touch ready to file their taxes for the 19-20 period. This got us thinking about the unusual and forgotten about expenses that many who submit a self assessment don't realise can be claimed.
We've paid particular attention to those expenses you can claim for working from your own home as this is such a big part of everyone's working lives at the moment.
If you're self employed and pay tax by self-assessment, you'll know that a large part of this is claiming business expenses on your annual profit. This can dramatically alter the amount of money you owe to the government in Income Tax and National Insurance Contributions.
HMRC will allow you to claim a range of expenses on your Self Assessment to offset some of your tax bill.
1. Electricity and Gas Bill
Let's face it, a lot more of us are working from home due to the current situation. If you work from home in any respect, you can claim part of your household costs.
You wouldn't be able to work without the lights on or without any heating in those winter months. So HMRC allows you to calculate a proportion of your housing bill per how much time you spend working and what parts of the house you use to work.
2. Council Tax
You read that right. This counts as a business expense and is calculated by how much time you spend working and in what areas of your home.
3. Your Mortgage
When you're working at home, your business relies on the roof over your head to keep operating. You can, therefore, claim a proportion of your mortgage interest as a business expense. This is again calculated by the proportion of the house that you use for business purposes.
If you're renting from a landlord you can also claim a proportion of your rent depending on how much is used solely for business purposes.
4. Motor Expenses
Have you ever used your car for your business? If so then you can claim part of your running and maintenance costs. It's always a good idea to record your mileage even if it's minimal. The reason is that you can claim 45p off your tax bill for every mile travelled up to 10,000 miles. After that, the rate is reduced to 25p per mile.
You can even claim an extra 5p per mile if you take another director or employee if your own private car on a business journey.
For motorcycles, the rate is 24p per mile, regardless of the distance travelled within that tax year.
5. Office Supplies
Other times, you don't have to go further than your desk. Look around at what you use on a daily basis. You could claim for:
Stationery
Printing costs
Your mobile phone
Computer software
Your laptop
You can even pay for 'pre-trade expenses' to cover items bought before you legally registered as self employed. The general rule of thumb covers anything within the last seven years that would qualify as tax-deductible had you bought them while trading.
6. Your Phone Bill
The easiest way to claim in your work calls is to have a separate work phone. The alternative is to log all your calls on your single phone to know how much of your phone bill should be attributed to work calls.
7. Charitable Donations
If you gave money to charity last year, you may be able to claim this on your Self Assessment return. If you're a higher rate taxpayer, all donations to registered charities through gift aid will reduce your tax bill. Don't forget entry to museums and zoos if they are paid on gift aid.
8. Training
Any training courses related to your business. This includes any training that helps you improve your skills or knowledge to use within your business. Unfortunately, this does not apply to any training courses that help you start a new business or expand into a new area of business.
For more specific guidance, we recommend working with an accountant. Get in touch with Catherine today. Give her a call on 01423 431889 or email catherine@bctaccountants.co.uk.