A perennial question is “Can I claim for…”.
The law around claiming expenses for the self employed and in company accounts is that the expense must be “wholly and exclusively” for business. Confusingly for sole traders something that is both private and business can be apportioned to make it “wholly and exclusively”, eg home office costs, car costs, but equally somethings cannot be apportioned and are disallowed, eg clothing – alas its on a case by case basis and the rules are quite fragmented. There is no one definitive list of deducible and non deductible items in statute.
For employees on PAYE, including company directors, the expense must be “wholly, exclusively and necessarily” – this means that very few, if any, expenses can be claimed as HMRC argue that if an expense was “necessary” the employer would pay it. Of course for Directors the answer is to claim though the company accounts and the more relaxed “wholly and exclusively” rules, but there can be risks around P11D Benefits in Kind if a business expense has a personal nexus.
For Sole Traders from 17/18 onwards under the rules for HMRC Trading Allowance you can claim the greater of £1,000 or the actual expenses you incur – which is useful if your expenses are not otherwise that high.
There are special rules for deducting travel and subsistence.
- For employees/company directors business travel is generally deductible, but home to work travel is excluded
- For contractors/directors of PSCs the temporary workplace rules often have to be considered
- For the self employed, HMRC have recently been cracking down on journeys that are “regular and predictable” We’ve written about that, here
So, what expenses can be claimed against tax? Well, there is no definitive list, but
- This checklist applies to our PSC / Contractor clients
- And this is a list we wrote for our Yoga Teacher clients
Between the two, those lists cover most bases, but look at the Expenses section on the Help and Guidance section of our website for a bit more on expenses as they are applicable to Companies. For Sole Traders the Help and Guidance on the website of our daughter business YogaTax gives a lot of useful detail