Claiming business expenses

Jul 5, 2012

By Paul Croombs

As a business owner it is vital that you maximise the amount of money you withdraw from your company and minimise the tax you pay on your income.

I thought it would be useful this month to list a few key items that you should make sure you consider along with your usual salary and dividend arrangements.

  • If you use your own car or van for business purposes then you can claim 45 pence per mile for these trips.  You can claim this allowance for the first 10,000 miles and 25 pence per mile thereafter.  This is a very good way to get tax free income from your business.  One of the conditions of this is that you need to keep a mileage log so that you can prove your business trips if the Revenue asks questions about them.
  • If you are paying out on items on behalf of your business make sure you claim these expenses.  Many business owners tend to lose receipts and therefore forget to claim the expense.  If the expense relates to the business you can claim it, however small.  If you aren’t so good at keeping records maybe keep an envelope in the car so that when you are out and about you can just pop the receipts in, then count them up at the end of the month and claim the money back from the company.
  • Due to the cost of office rental many small businesses are working from home.  If this is the case it is worth considering the amount you claim from the business for use of your home.  The Revenue says that you can claim £4 per week for use of your home without having receipts to prove what it costs you.
  • If your spouse does not have another job but does some work for your business, maybe it’s worth considering whether to pay them a salary.  They will be able to earn up to £8,105 before paying Income Tax.  This will then mean you do not have to earn as much to have the same overall family income.  This will obviously differ for everyone depending on their circumstances, so we would recommend that you speak to your Accountant before doing this.
Overall I would recommend to all business owners that they claim all that they are entitled to.  This ensures they pay the very least amount of tax.  If you would like further advice on how you can maximise the income you draw from your company and minimise the amount of tax you pay please call us for a free, no obligation meeting.

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