Managing a business efficiently is key to sustainable growth and profitability. Whether you’re a small business or operating on a larger scale, it’s important to have an understanding of the numerous business expense categories, from office rent to travel expenses.
With such a varied range of allowable business expenses, you could claim tax relief on the majority of them. Read on for our ultimate list of business expenses.
What Are Business Expenses?
What are business expenses? Business expenses encompass all costs incurred in the process of generating revenue. From business trips to essential office equipment, most of the money that’s spent for business purposes can be claimed back.
As a business owner, it’s important to have a clear understanding of the main expense categories to efficiently complete financial reports and tax payments.
HMRC has set clear guidelines for businesses in the UK to follow regarding allowable business expenses; while it might take some time to educate yourself on what they are, knowing what you can claim tax relief on is helpful.
In most cases, consulting with a professional accountant or tax advisor is the best option, especially if you’re unsure of how to accurately claim business expenses. Qualified accountants can guide, support, and advise you on what can and can’t be claimed back.
Top Business Expenses
Usual business expenses typically include office rent, equipment, utility bills, employee costs, travel expenses, insurance, and paying for professional services, to name a few. You’re able to claim tax relief on most business expenses; however, there’s a range of expenses which you can’t.
As a business owner, it’s important to understand what you can and can’t gain tax relief on. Vital business expenses can be tedious to keep up with, but they’re essential in helping your business operate effectively. Let’s take a look at a few of the ultimate business expenses.
The main business expenses include:
- Office expenses
- Advertising and marketing
- Travel expenses
- Professional services
Some others you may be able to claim back include:
- Interest and charges on business bank accounts
- Work equipment
- Work costumes
- Business Insurance
Office Expenses
Office expenses vary; from rent to utility costs, there’s a range of payments required to keep your business premises running smoothly.
Significant expenses include monthly or annual rent payments and utility bills. Electricity, heating, water, and internet services should be paid on time.
This key business expense category provides your employees with a safe and comfortable environment to work in. While these allowable expenses are required, office supplies, including desks, chairs, printers, and other essentials, are considered key expenses, too.
Advertising and Marketing
Costs related to advertising or marketing are essential expenses. Whether it be digital ads, print media, brochures, business cards, or other promotional materials, you’ll be glad to know that you can claim tax relief on these expenditures.
However, it’s important not to confuse marketing costs with entertaining costs (like taking a client out for lunch). Hosting fees and general website maintenance might fall under marketing and advertising expenses, too.
Advertising and marketing are significant regardless of the industry that you work in, helping to reach a wider audience of potential clients and customers.
Travel Expenses
Transportation, fuel costs, accommodation, and dining fall under travel expenses. It’s common for professionals to take part in a business trip on behalf of their company. However, trips can be costly, especially if staff are away for long periods.
Travel is a tax-deductible business expense, but only if the trip was solely for work-related purposes. If your trip was for mixed purposes, you’ll only be able to claim whatever you can separate from the private part of your trip.
It’s important to keep receipts and other forms of proof regarding your spending while away on a work trip. Like all expenses that are eligible for tax relief, it’s crucial to keep receipts so that you can prove what’s been spent.
Professional Services
Business owners would struggle to financially run their businesses without the help of skilled professionals, such as accountants. Many companies pay expenses for professional services, including bookkeeping and accounting, among many others.
In some cases, businesses require legal representation, need help drafting contracts, and have to pay consultation fees when they need expert advice or general guidance.
These specialised services come at a cost. You can claim the business cost of professional fees incurred for your business; essentially, this means that you can claim the fees of solicitors as expenses. This is most beneficial for businesses, especially when they require professional services often.
Additionally, you could claim business costs on overdrafts, business-only credit card and bank fees, as well as interest on business loans.
Other business expenses include employee training and development services, entertainment, and payroll, to name a few.
Training is a fast-growing expense category, especially for businesses that have just started up or companies that want to begin installing new routines and processes. Claiming tax back on key business expenses is possible – however, some expenses can’t be claimed.
Claiming Allowable Expenses
Overall, business costs can be expensive. The great news is that businesses across the UK can claim expenses, which reduces their companies’ tax bills. Although it sounds simple, it’s understandable that some businesses remain unaware of what’s considered an allowable expense and struggle to know how to deduct job expenses correctly.
If you want to deduct business expenses but are unsure how, we advise speaking with a specialist for expert tax advice. Here at DH Business Support, we work closely with businesses, offering tax advice, among other services. We make paying taxes simple.
Our team has a wealth of knowledge and experience within the industry, having supported numerous businesses up and down the country. We’ll provide you with everything you need to know regarding business expenses and what you can and can’t claim back.
We understand how difficult it can be to navigate the world of business, let alone deal with taxes. We aim to make paying taxes as easy as possible; we can guide you through business tax while offering support and guidance; our team of dedicated professionals can help you by informing you on what expenses can be claimed.
Our team of experts at DH Business Support remains on hand to guide you through the process of claiming tax relief, making it easy to manage your business expenses. To find out more about our services, we encourage you to contact us today. We look forward to hearing from you.