Funny Ways People Write Off Alcohol on Corporate Expense
As an employee you'll usually be provided with a guide or employee handbook that clearly outlines the out of pocket expenses you are able to claim back. However, as a sole trader or a self-employed worker in a partnership, or if you're employed by your own limited company, the guidelines are not as clear cut.
Nearly 80% of self-employed people don't claim all of their business expenses. While a few lost and forgotten claims can feel like nothing, it can quickly add up to a lot. For example, 57.3% of self-employed won't typically claim back expenses that are under £10, meaning that a minimum of £24m is lost annually on unclaimed expenses.
Beyond not knowing what can be expensed for many workers at small and medium-sized enterprises (SMEs) the most commonly cited reason that things were not expensed was that the current expense reporting process in their company is too complex or time-consuming.
From postage to office bananas, here are a few unusual expenses that could be mistakenly left off the list when it comes to reclaiming:
If it's low, it can still go
With almost 60% of self-employed people in the UK not claiming business expenses that are up to £10, it is important to remember that no matter how small the expense, it's yours to claim (provided HMRC allows it, of course). It's easy to forget the power of the pennies and, when it comes to claiming, many people are missing out on the big money that comes from culminating small change expenses. So, whether it's a £2.99 sandwich you bought while you're away on business overnight or stamps for business related postage, make sure you keep those receipts and claim.
Travel – beyond the train ticket
There are many elements when it comes to travelling for work and though most remember to claim back for 'bigger things' like train tickets, 36.8% don't claim food back when they are travelling for work – even though they are permitted to do so by HMRC if the journey is outside their usual work routine. In addition, 17.2% don't claim back accommodation costs when they are travelling for work.
If your business relies on travel, for example you are a travelling musician or if you're staying overnight for work, then you can always claim food and drink to a reasonable amount.
Beyond food, it is important to note that when travelling for business, HMRC does not require you to use the cheapest available method of transport – or even to claim only the amount that the cheapest method would have cost you. You can claim the full amount you spent on the journey. The main issue with travel and accommodation is to make sure you're certain that the only costs you're including in your accounts are for business travel. If your journey is for mixed purposes, and you can't split out the business and personal elements, then you can't claim any of the cost of that journey.
It seems like an overwhelming task having to stay on top of your expenses, particularly while travelling. But don't let rushing around in a new place stop you from claiming back your expenses – it can be as easy as spending a few minutes on your phone in between all the chaos. When you do this, you'll stay on top of your claims and thank yourself later, and remember – if you are in any doubt about what you can and can't claim, you should seek professional advice from an accountant who will be able to advise you.
You called it
Before you rack up the hours on your phone and feel worried about the bill waiting for you at the other end of the month, remember that if you use your personal phone for work, you may be entitled to claim tax back on a portion of your phone expenses.
A claim for the business-only calls made on your personal mobile or landline phone bill, is also a legitimate expense. You can also reclaim the VAT element of the business calls, but you won't be able to reclaim any part of the line rental, as you would incur this cost anyway. However, it is increasingly difficult to separate the cost of business calls, given the way mobile (and many landline) phone operators package call costs. Unfortunately, if you can't separate the business element of your personal mobile phone usage, you cannot make a claim.
Working from home
Many freelancers, sole traders and business owners frequently work from home. But it may shock many to find out that they could be able to claim for some of the costs they incur from their property.
If you're self-employed and buying your home through a mortgage, you may be able to claim a proportion of the interest only – not the capital repayment. And while you can't charge your business rent when you're self-employed, because legally you are the business, you may be able claim a proportion of the rent for your business if you're renting your home from a landlord.
If you are a sole trader or in a partnership, you can claim a proportion of your council tax cost – although, depending on how much you use your home for business, you may have to pay business rates rather than council tax.
You may also be able claim the business proportion of your gas and electricity costs for lighting and heating in the room(s) you use for business as well as the full cost of all your business use of your home phone. Additionally, If you use a lot of your home water supply for business – for example, if you run a laundry service or dog grooming parlour – then you would need to apply to the water company for this to be separately charged, and you could claim the full cost.
Claiming costs of working at home is not as simple as it initially sounds and if you're in any doubt as to what you can claim, remember that an accountant is only a call away.
Caffeine hit
Another well-known culprit as an unclaimed expense is an infamous staple of working life – the humble cup of coffee. Perhaps because HMRC's rules around when and how you can expense your caffeine hit are so intricate, it should come as no surprise that 44.2% of Brits say they don't claim back any of their coffee costs during the year.
As it happens, HMRC does permit claims for coffee for the self-employed if the coffees are purchased during an overnight stay away from home while on business, or during a journey outside your usual business routine – such as, potentially, attending a trade show or conference. And while these may not be quite as valuable as other common unclaimed business expenses such mileage, they still add up.
Imagine all the things we could do if we didn't didn't ignore all those unclaimed pennies? When asked what they would do if they claimed back all their expenses over the year, we found that 37.9% of self-employed workers said they would book a much-deserved holiday, while one in six men say they would go to the pub more often.
Fir trees and festive fees
It isn't just the common recurring expenses that are being missed, unusual activity relating to business can also be eligible to be expensed. There are some surprising festive fees to keep in mind as Valentine's day, Halloween and Christmas roll back around in 2020. Our research at found that keeping warm in the winter is a priority around Christmas time with around 1 in 5 SMEs (19.7%) saying they have expensed Christmas jumpers during the holiday period. Perhaps even more surprising is that more people have expensed Santa Suits (15.1%) than office Christmas trees (13%). Nearly a fifth of self employed Brits (16.8%) said their most claimed expense was (ironically) Christmas gifts for staff.
Christmas parties are no cheap ordeal – in the past few years, workers have been known to spent £10bn on socialising with their colleagues. Alcohol for Christmas parties is the most claimed office expense over the festive season (26%). Moreso, data revealed 25-34 year olds are the booziest age group, with 30.7% of party animal millennials most commonly claiming back money for Christmas party alcohol, closely followed by 30.2% of 18-24 year olds.
Whether during the festive season, or just your bang-average weekday – my advice to self-employed people is to be vigilant when claiming back the expenses that rack up over the year to avoid missing out. Technology nowadays has put the power in our hands to make claiming back more efficient and accessible than ever before. Whether you are travelling for work or organising roses for an office Valentine's day fiesta – be sure to keep your head above water and take advantage of the technology that allows you to quickly and easily claim back your expenses – no matter how small!
Emily Coltman FCA is chief accountant at FreeAgent
Further reading: Improving your tax return – 10 top tips to make you wealthier
Source: https://www.whatinvestment.co.uk/surprising-self-employed-expenses-2617663/
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