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Can I claim all of my business expenses against tax?

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In short, you will be able to claim most, if not all of your business expenditure against tax. However HMRC’s rule book states that ‘expenditure must be incurred wholly and exclusively for the purpose of the trade, profession or vocation’ to be allowable for tax purposes, so here are some points to watch out for:

  1. Expenditure on items that have mixed business and non-business use should be apportioned accordingly. Examples of items that often have mixed usage are car and telephone expenses.
  2. The cost of entertaining clients is never allowable against tax. The cost of treating your employees is allowable however, within specified limits.
  3. The cost of a sandwich and drink at the local shop is not allowable - HMRC hold the view that you would eat even if you were not at work (so it is cannot be wholly and exclusively a business expense!). You can claim for meals if you have made a journey for genuine business purposes. Be aware that this does not include travelling from home to work, nor can you claim if you work at the same client’s office on a regular basis.
  4. The cost of clothing is also not allowable against tax. Again this is because HMRC have the view that you would wear clothes even if you weren’t at work! The only items that can be claimed are clothing with your business logo on, and safety wear.
  5. Fines and penalties can not be claimed against tax. If you incur a speeding fine whilst rushing to meet a client but you cannot claim tax relief on it - you cannot get tax relief from doing something illegal.
  6. The costs of training to develop a new skill are generally not claimable, however the cost of progressive training or CPD to improve current skills is tax deductible.

The rules for reclaiming VAT on an expense roughly follow the rules for income tax but there are some exceptions. If you need to know more please ask.