What Expenses Can I Claim For Tax Purposes?

An expense or part of an expense (when you can identify a suitable proportion) can be claimed as a deduction from taxable income for tax when it is incurred for the purposes of your business.

Specific rules in statute and almost 100 years of tax case law have made this topic complicated.

In this section we cover what you can and can’t claim, and provides worked examples, FAQs, planning points and tips.

Can I charge my company rent for use of my home?

  • If your company is based at your home, or
  • You perform a substantial amount of your duties as a director or as a company employee working from or based at your home.

You may consider:

  • Recharging the company, on the same basis as a conventional home working employee for a proportion of your bills and running costs. This is explained in Working from home (directors) or
  • Formalising a licence agreement with your company in order to allow it to occupy part of your property. It then pays you rent and service charges and you then claim all your expenses under self-assessment.

    If you charge rent you are effectively running a commerical property letting business and so you may claim a proportion of your relevant overheads and variable costs. You must also complete the land and property section of your tax return to declare any rental profit.

    The alternative treatment – for the director to reclaim expenses from his company on the same basis as any employee who is home-working. This generally denies any deduction for mortgage interest, council tax or mixed use costs.

These practical tax guides genuinely save our clients hundreds of pounds in unnecessary tax, whether they trade as a sole traders or limited company.

  • Motor expenses: two different ways of claiming your costs.
  • Travel: the devil is in the detail, are those journeys really all for business, or are you just commuting?
  • Subsistence: should carry a government health warning. Is your trade itinerant in nature, what does that really mean these days?
  • Working from home: how much, why and when?
  • Training costs and course fees: what is being achieved when you train yourself to do something? That may colour what you can claim.
  • Repairs and maintenance: newly acquired assets, dilapidations, renewal or capital improvement?
  • Employing the spouse and family: when wages and benefits are disallowed for tax.
  • Living expenses: these are generally personal by nature so no claim is possible.
  • Entertaining and gifts: any chance of tax relief, well….

If you would like to find out more, please contact us…