If you still don’t know how to properly handle your self assessment tax, worry no more because this blog can help you.
Tax Guide: 14 Self Assessment Tax Expenses You Should Claim
There is a possibility that you are paying much higher taxes than you need to.
Your tax liability significantly depends on the profit you make. However, there are a wide variety of expenses you can claim back against your taxable income to reduce your tax liability. This is because the tax offices acknowledge that running a business comes with costs, not just an inflow of revenue.
It can be confusing, and challenging to identify self-assessment tax expenses you could deduct, especially if you are not well-versed in accounting. Continue reading and learn more about it in this blog!
Donations to Charities
If you are a higher-rate taxpayer and donated to charities recognized by HMRC in the taxable year, you can claim tax relief on donations made under the Gift Aid scheme.
You can claim the difference between the basic tax rate claimed by the charity on your donation and the higher tax rate you actually pay.
But if you have forgotten about claiming or are unaware that you could, you can still claim the tax “overpayment relief” within four years after the end of the tax year the donation happened.
Home Office
This applies if you are working from home. Any expenses related to your home, including utilities, rent, council tax, and mortgage, can be claimed from your taxable profit, provided that you can compute the proportion of how much applies to your business.
HMRC sets no specific guidelines to compute for the apportioning, only that you do it on a fair and reasonable basis.
Bad Debts
This expense is often forgotten or unused due to a lack of awareness that you can claim it. In claiming bad debts from your taxable income, you should ensure that the invoice is genuinely not recoverable anymore.
Additionally, this expense is only claimable from your self-assessment tax if you use accrual basis accounting. The reasoning is that in cash basis accounting, you do not account for unpaid invoices as your taxable income yet, so there is nothing to deduct.
Mileage Cost
If you travel for business purposes, you can claim for mileage allowance, depending on the vehicle you drive:
- Car or van – 45p per mile for 10,000 miles; after that, 25p per mile
- Motorcycles – flat 24p per mile
- Bicycles – 20p per mile
Note that the mileage used should not be for personal but only for business travels. This also covers other travel expenses, such as, insurance, repair and maintenance, fuel, parking, accommodation, meals, etc.
Stationery
If you have an office, you can claim anything on your desk on your self-assessment tax. Anything from the paper you use, ink, printer, pens, desk, and office chairs, so long as you use it for business, you can deduct the cost from your taxable profit.
However, those more significant purchases, like high-quality computers with three years of useful life or more expensive systems and software, cannot be immediately claimed as expenses. There are only capital allowances as tax relief for these types of expenditures..
Asset Depreciation
Many often forget to claim depreciation expenses after not declaring the purchased asset as part of your self-assessment tax return in the first year.
As mentioned previosuly, expensive assets with long-term use cannot be deducted immediately on the first year of purchase. Instead, the amount is depreciated gradually, and the claimable amount is the depreciation expense per year.
Memberships and Subscriptions
Membership and subscription fees can be claimed as deductible on your self-assessment taxable profit if they are related to your work. This includes memberships in professional organizations, trade associations, and unions.
Professional Fee
Suppose you hire solicitors, accountants, financial advisors, and other professionals who provide services to assist you related to your trade or business. In that case, you can claim the fees you paid to them and declare them on your tax return.
Subcontractors
Aside from professionals, you may have also hired subcontractors for your business. This includes individuals or businesses who provide services to support you in carrying out your trade or business, such as contractors, freelancers, or agencies.
Marketing
Most business owners spend on marketing but often forget to claim marketing costs. These costs include advertising, promotional materials, market research, and other activities that help promote your trade or business.
However, there are exceptions to this deduction. Expenses incurred to entertain clients, suppliers, or hospitality events cannot be part of claimable expenses on your self-assessment tax return.
Bank Charges
Bank charges include fees for bank accounts, overdrafts, and other bank services you use during your trade or business. These are all deductible from your taxable profit, except if you use cash basis accounting, in which you can only claim up to £500.
Phones and Communications
This includes expenses for business-related phone and internet services, as well as costs for mobile phones, landlines, and other communication devices. However, if you use them for both business and personal, as with home office expenses, you should come up with apportioning computation fairly and reasonably.
Clothing
Clothing costs are also one of the expenses you should remember to be claim. The requisites for this expense to be deductible are simple: it must be work-related only.
You cannot claim for your day-to-day clothes, only for work-related uniforms and protective clothing needed to carry out work.
Training and Courses
Any training and courses you paid to expand your knowledge and skills related to your business can be claimed as part of your self-assessment tax return. However, you cannot do so for those you paid for before starting your business, such as guide courses for start-ups.
Frequently Asked Questions
What expenses can I claim on tax without receipts?
You can claim expenses without receipts using reasonable estimates, but you must explain why you estimate these as part of your self-assessment tax return.
Common examples are online subscriptions which usually do not have invoices. You are good to go as long as you prove these amounts go out of your bank account
How can I file for my Self-Assessment tax return?
You can file your Self-Assessment tax return online or by paper post. This depends on your business needs or preference. If done by paper, you should receive it from HMRC every year and posted back upon completion.
What are the Self-Assessment tax returns deadline?
The general deadlines are:
For paper – 31st of October, the same year
For online – 31st of January, the following yearUnless you receive a notice during the tax year, after this, you must file your tax returns within three months after the notice.
Self Assessment Tax Guide: Conclusion
After identifying the expenses claimable on your taxable income, add them all up and put the total to your Self-Assessment tax return. Remember to note that generally, as long it is for business purposes, it is deductible. However, it is best to consult an accountant for accuracy.
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