Money Matters: Allowable costs – claim them right!

Money Matters: Allowable costs – claim them right!

Laurence Hart

Research suggests the majority of micro-businesses don’t claim any costs under £10. Maybe they seem too small to be bothered with – but it could lead to you overpaying hundreds of pounds of tax, so you need to claim it right!

 
You’d be forgiven for being confused about personal/non-allowable costs. Most people find it challenging knowing what they are, versus what is strictly business-related/allowable.
You could be working from home and struggling to understand what you can claim as allowable costs, or how to analyse whether it’s better financially to rent somewhere separate.
You could be buying a lot of things for your business on your personal Amazon account, and failing to keep track of which is which.
You could run a restaurant, and be using the stock for your personal meals.
Most often, you could be accidentally using your business card for personal items.
The biggest impact of this most often getting a bigger tax bill than you expected or set aside for, either by ending up not claiming what you’re allowed or assuming all along that your costs are higher than they actually are.
Talking of our friends at HMRC, their next plan is to demand to see transactions from all your accounts (they are already directly asking companies such as eBay, AirBnB, & Vinted for them) so they can do your tax calculation on their system.
Get ready for that welcome pain relief/unacceptable privacy intrusion [* delete as applicable] by being sensible and disciplined about keeping business & personal separate, and aiming to be totally transparent in all your financial dealings.
Being muddled between personal and business also makes it difficult for you to get the correct big picture of your finances and so make good, informed decisions about revenue targets, cost centres, and pricing.
 
#ownallyourfinances
 

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