Expenses incurred in your business or on behalf of your employee that you can claim for and be deducted against tax are an allowable expense.
The Inland Revenue has a vast list for mileage claims and general travel but there are others that you can deduct for tax purposes.
Here's a brief list of deductions you can make against tax. The rules are not hard and fast so if you are in any doubt it's best to speak with your accountant or telephone the Inland Revenue for a decision.
Most self employed people may find it hard to separate personal and business expenses but the general rule of "is this expense for my business" is to ask "was this necessary to generate income for my business".
Most company have an expenses policy but this is more geared towards what they'll reimburse as a business rather than what can be reclaimed against tax.
Many companies may offer a "per diem" expenses regime where people get a daily allowance and must account for the "float" they have and make claims.
This method operates in much the same manner as normal expenses. However, you need to manage the budget yourself rather like a mini bank account or cash account accounting for expenses together with the claims you have made.
Employees and Directors of a company can claim vehicle mileage for their own private cars at maximum rates set by HMRC - these are not the same as company cars. The current rates are:
If you use a motorcycle or bicycle you can also claim mileage if you use it for business purposes. The current rates are 24p and 20p respectively no matter how many miles you cover in a tax year.
Rates correct at 17th June 2016.
Travel is an area that has been looked at in detail but almost all travel related costs can be claimed back including:
This list excludes any petrol or diesel purchased as you should be claiming the mileage allowance above.
You can claim the cost of hotel accommodation and food subsistence if it's clearly for business purposes and you can show that this was temporary and not a permanent place of work - eg: for meetings in other parts of the country or overseas.
You will need receipts. General subsistence can be claimed at a maximum £5 per day if you don't have receipts.
Entertaining is an area where HMRC leaves little leeway in what can be claimed back. You can claim for a Christmas Meal once per year so long as the cost is no more than £150 per head.
If you work from home and use part of your house as an office you can claim back in your accounts the % of space that your office takes in your house of all the associated costs such as utility costs (gas, electricity, water etc) and mortgage or rental payments.
When calculating the % be absolutely sure that the amount is reasonable and that the office is only used for work purposes and that, for example, it's not the kids playroom. The full list on home as office expenses can be found at HMRC website here
Of course like any other business you can claim for standard expenses during the course of running your business and standard costs deductable before paying tax include:
The Inland Revenue HMRC have a massive online manual that covers every type of expense imaginable and whether or not you can claim it as allowable.
They cover the following topics: administration, advertising, annuities, bad debts, compensation claims, crime related expenses, dilapidations under a lease, share schemes, entertainment, gifts, guarantee payments, hire purchase insurance, interest, loan finance, losses, overseas taxes, patents and royalties, pension schemes, pre-trading expenditure (ie: start-up costs, professional fees, provisions, rent and rates, repairs and renewals, staffing costs, security, subscriptions, trade organisations, travel and subsistence and use of home as office (covered above).
You can wade through this manual online here.
Generally if it's not work related then it is not allowable against your tax liability. The main item that HMRC will not allow is entertaining and most companies also exclude this from their expenses policy.
Uniforms is an area which is not concrete. If the uniform you have for your work can not be used outside of work then you can claim. But even some lawyers could not claim for their work attire as it was deemed that it could be used elsewhere. The Inland Revenue have strict rules here.