Tax
7 min read
Expenses people miss, and three they claim by mistake
Most people are cautious in the wrong places. They leave real costs off the return and then claim one thing that draws a question.
The test that decides everything
A cost is allowable if it was incurred wholly and exclusively for the business. That is the whole test. Where people go wrong is assuming that mostly for the business is close enough, and it is not, unless the cost can be split cleanly.
A phone bill splits. A suit does not, because you could wear it to a wedding. That distinction explains almost every answer below.
Five people routinely miss
Working from home, either the flat rate or a share of actual bills
Professional subscriptions, memberships and trade bodies
Software and tools bought personally in year one, before the business account existed
Bank charges, card fees and payment processor percentages
Training that keeps existing skills current
The last one has a catch. Keeping a skill current is allowable; learning an entirely new one usually is not. A designer taking an advanced course in their own tools is fine. The same designer training as a plumber is not.
“Nobody has ever been questioned over a claimed software subscription. Plenty have been over lunch.”
Three that cause questions
Client entertaining is the big one. It feels like a business cost because it is, but it is specifically not allowable for tax, so it comes off your profit for management purposes and goes back on for the return.
Everyday clothing is the second, including the smart shirt you only bought for a pitch. Protective gear and a genuine uniform with a logo are different.
The third is the daily coffee. Working from a cafe does not make the coffee a business cost unless you are travelling away from your normal place of work.
Home office and mileage
For home working, the flat rate is simple and rarely queried. Working out a share of your actual rent, heating and broadband gives a bigger number but needs a defensible calculation based on rooms and hours.
For driving, claim the approved mileage rate rather than fuel receipts. It covers fuel, wear and tear, and insurance in one number, and all you have to keep is a note of the journey, date, and reason.
A one-line note per journey is enough. A spreadsheet nobody updates is not.
What to do with the grey ones
Send it to us with one line about what it was for. Most answers take thirty seconds, and the ones that do not are exactly the ones worth asking about.
Claiming something borderline is not a disaster. Claiming it without being able to explain why, eighteen months later, is the part that costs you.
