Your tax bills as a new entrepreneur may be overwhelming. While we’re on the issue, you might be wondering “what can I claim on my tax return”. Did you know that you can use many allowable expenses to minimise the amount of tax you pay correctly? We’ve compiled a list of crucial Self-Assessment costs that you can deduct from your profits.
What types of entrepreneurs are required to pay taxes?
Self-employed sole traders, limited company directors, shareholders, and members of limited liability partnerships (LLP) must submit Self-Assessment tax returns to HMRC each year. Most individuals will be required to pay Income Tax and National Insurance contributions on their taxable income based on their earnings. What you owe is greatly based on how much profit you made the previous tax year. Fortunately, the UK government recognises that owning a business may be costly. You can deduct part of these company expenses from your profit, lowering the amount of tax you owe through Self-Assessment.
Did you donate to charity last year? You should claim such donations as Self-Assessment costs on your tax return if you did. Individual gifts to registered charities or community amateur sports clubs (CASCs) are tax-deductible. This is known as tax relief, and how it works is determined by how you choose to donate funds. This tax relief means that if you gave £1,000 to a registered charity last year as a higher rate taxpayer, you could claim £250 back on your Self-Assessment form. If you’re wondering how to “claim my tax refund,” contact Taxback. We’re one of the country’s oldest and most comprehensive tax refund companies in Gloucester Road, West London.
Types of charities in the UK
According to available data, the following are the six types of charity organisations available in the UK: There are thousands of registered charities in England and Wales.
- Education Charities
- Health Charities.
- Environment Charities
- Animal Charities
- Art and Culture Charities.
- International NGOs.
Do you travel for business? As part of your Self-Assessment return, you can claim a mileage allowance. If you drive a car or van for work, you can deduct 45p from your tax bill for every mile driven up to 10,000 miles. The amount you can claim after that is reduced to 25p. For example, if you drove 11,000 business miles last year, you can claim £4,500 in Self-Assessment expenditures for the first 10,000 miles and £250 for the remaining 1,000 miles for £4,750. Motorcycles cost somewhat less, with a flat rate of 24p per mile when expenses are simplified.
What are typical travelling expenses?
However, the best part is that the vehicle running expenses cover the entire gamut of expenses incurred, including parking fees, fuel, maintenance, licence fees, repairs and servicing etc. Also allowed are hotels and meals while on a business trip, train, bus, air, taxi fares etc. It’s a great relief that you can claim tax back for travel expenses as they’re a significant portion of most businesses in the UK. We’re Taxback, and we’re a UK tax accountancy firm here to help you with self-employed tax refunds.
Financial and legal expenses
You should include any expenditures related to employing an accountant, solicitor, surveyor, architect, or any other expert you’ve engaged to assist you in determining your Self-Assessment expenses. Also, you can claim professional indemnity insurance premiums and a variety of additional bank and insurance fees. Bank, overdraft, and credit card fees, interest on bank and company loans, hire purchase interest, and leasing payments, are all allowable expenses. If you want to do a tax refund in the UK for your legal and financial expenses, contact us. We specialise in Non-Resident tax refunds, UK tax refunds and self-assessment tax returns for anyone paying UK tax.
Costs associated with staff
Aside from claiming nanny or child-minder costs as an expense, there are many other costs involved with workers employed to manage and run a business properly. If you hire permanent staff, seasonal employees, or contractors, you can deduct a wide range of expenses. These employee expenses might be used to your advantage when preparing your Self-Assessment return. Employee and staff salaries, bonuses, pensions, and employee benefits are all examples of staff costs. Aside from these business-related training courses, agency fees and subcontractor charges are generally classed as employee costs.
Your mortgage and utilities
If you work from home, you should be claiming a variety of Self-Assessment expenditures. You can deduct a portion of your gas, electric, water, broadband, and telephone costs when working from home. However, you must determine how much of each bill applies to your company. It’s a good idea to be aware of a few essential considerations to keep in mind when claiming house costs. HMRC doesn’t provide specific guidelines on accomplishing this; you need to allocate expenses between business and private use on a ‘fair to all and reasonable basis.
Costs associated with marketing your business
Another Self- Assessment expense that business owners frequently overlook is the cost of marketing their company. HMRC will enable you to claim business expenditures for any newspaper or directory advertising, bulk mail advertising (or “mailshots”), any costs related to free samples you’ve manufactured and distributed, and website hosting and maintenance charges. There are, once again, a few exceptions to the rule. You cannot claim expenses for entertaining clients or suppliers or event hospitality as part of your annual Self-Assessment return.
You can claim certain clothing items to decrease your Self-Assessment tax due at the end of each fiscal year. Work-related uniforms, protective clothing required for your job, costumes for performers or entertainers, and others are permissible clothing expenses. Your salesman’s everyday clothes are not an allowable expense in this state. On your annual tax bill, you can deduct the total cost of work-related apparel from your profits. They must be necessary, work-specific clothing items to qualify as a business expense.
Can I claim all my taxes back when I leave the UK?
If you plan to leave the UK to live or work in another country, you may be entitled to claim tax back from the UK. For this, you must typically return HMRC form P85 titled ‘Leaving the UK — Getting Your Tax Right’ when you leave the UK. You can also submit a claim online. Speak to us if you need to claim tax back when leaving the UK. Taxback is one of the UK’s oldest and most comprehensive tax refund firms and can help you with our expertise.