Many business owners whether self-employed or running a limited company fall into the trap of trying to manage their tax affairs by themselves.
On the face of it, things seem simple… but it’s too easy to make mistakes that can cost you dearly!
Missing out on things you can claim back One of the most common errors DIY accountants make is not claiming back valid expenditure claims. HMRC guidance notes on their website aren’t the easiest things to understand, so even if you have a good idea of what you can claim. Working out the precise details so you don’t over or underclaim can be a minefield.
Simple expenditure you can claim Mileage is a big one many people miss out on. It’s perfectly acceptable to claim for all your business-related trips. EG: To meet clients. (you can’t, however, make mileage claims for travel to or from a permanent place of work)
The rate you can claim in a car is 45pence per mile up to 10,000 miles. Anything over 10,000 miles is claimed at 25pence per mile.
On a motorbike, the claim is fixed at 24pence per mile regardless of distance travelled.
We’ve successfully reclaimed thousands for clients who hadn’t claimed the correct business mileage.
What else can you claim? Acceptable claims will depend on your individual business but some examples of common claims are:
1) Membership fees to a professional body – if you pay a subscription to be part of a
professional body as part of your business this can be reclaimed. 2) Trade magazines – If you buy magazines or publications related to your business, these
costs can also be claimed.
3) Equipment that you need to run your business or do your job – Most people know that
computer equipment can be claimed, but there may be more tools or similar that you need which can be claimed. 4) Workwear – Things like personal protective equipment if you are working in construction
eg safety boots, helmets, hi-viz clothing etc can all be claimed
Claiming for things that you shouldn’t You can’t claim for anything that’s not necessary for work or to run your business. We had one client incorrectly claim for suits, his argument was that he needed them to look respectable when meeting clients! Unfortunately, HMRC doesn’t see it that way and that’s not a valid claim.
You can be penalised and get hefty fines if you get it wrong so it’s imperative to get things right.
Paying too much tax & risking a penalty Often the DIY accountant ends up paying too much tax (or risking a penalty) That’s where RJF would come in. We’d take the time to question all your expenditure to see what you can claim and what you can’t. The end result is we save clients thousands in tax.
This means you get your accountant’s fee back many times over (which is also tax deductible!)
So it’s a worthwhile investment getting a proper accountant rather than trying to DIY. Call us today for friendly advice and guidance.