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Festive Expenses You Can Claim Back

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We’ve made a list of festive expenses that you may be able to claim back as a business expense.

Christmas time can be a busy and expensive time for many businesses – big or small. But with the January Self-Assessment Tax Return coming up, here are some festive expenses that you might not have thought about reclaiming.

Decking the Halls

If ‘business as usual’ has resumed in your office, then you may have decided to also carry on the festive tradition of decorating your office for the holidays. What you might not be aware of, is that you can actually claim back decorations like a Christmas tree, tinsel, and wreathes as tax by logging them on your accounts as running costs for the office. Bear in mind that this doesn’t extend to employees working from home however, as HMRC judges this as personal enjoyment, not office related.

A Christmas Party

Providing that you went ahead with a Christmas do this year, be it virtual or in person, you may be liable to claim expenses back as tax. However, this depends on who was in attendance.

If the event is/was open to all of your employees, then the whole thing will be taxable, no matter the number of people in your operation. However, you cannot claim expenses if there were also clients and/or associates in attendance, as this is not acceptable for corporation tax or VAT purposes as HMRC classes this as business entertaining. Furthermore, any even that is not open to all employees will also not be liable.

As a result – if you do decide to invite clients and/or associates to a Christmas event, remember to allocate sufficient funds to cover their expenses because you won’t be able to claim any tax relief, or reclaim any VAT on costs. Bear in mind that you should still record this in your books, and add the costs back on when you come to calculate your profit for tax.

Presents

As it is Christmas, you may choose to buy gifts for staff or clients. In the case of clients, you are able to record these as a business cost on your books, provided that these gifts meet the appropriate guidelines so as not to constitute potential bribery. This means:

  • You must not spend more than £50 (p.a.) on gifts for any one client.
  • You must not gift a client an item that can be exchanged for goods or money – such as cash or vouchers.
  • You must include a conspicuous advert for your business. For more information regarding gifts to clients, please visit the HMRC website.

In the case of your staff, there are other key tax considerations regarding gifts:

  • If the gift has no cash benefit, then it may be accepted by HMRC as trivial benefit, which means that you will not need to pay extra tax or National Insurance, or report it on the employee’s P11D form.
  • If your gift does include cash payment to staff – they will be classified in the same way as regular earnings by HMRC so should be put through payroll as normal – and might require a National Insurance payment.

More guidance and information on gifts for staff can be found on the HMRC website.

If navigating this all feels a little daunting, why not entrust your bookkeeping to the professionals? You can find more information on the upcoming January tax return here, and to find your nearest Rosemary Bookkeeping business, click here.

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Information on Allowable Expenses

When it comes to carrying out your self-assessment, it’s hard to know what can and can’t be included as allowable expenses. Contrary to popular belief, the government want you to succeed in business so will allow you to spend on certain items in your business without having to pay the tax for them.

In general, tax-deductible items will come under the following categories;

  • Travel
  • Office
  • Stock
  • Marketing
  • Legal & Financial

Travel Costs

fuel expenses

Any business-related car or van use may be allowed. Things such as;

  • Vehicle insurance
  • Fuel
  • Hire charges
  • Repairs
  • Servicing and breakdown cover

You are not able to claim these charges for general use such as driving to and from work but if your vehicle is genuinely used for work purposes, these allowances may be available for you.

It can be difficult to calculate your use if your vehicle is used for both personal and business. In this case, refer to the “simplified vehicle expenses” form on the government website where you will find a flat rate for each circumstance.

Under travel, you may also be able to claim for;

  • Train
  • Bus
  • Plane
  • Taxi
  • Hotel rooms
  • Evening meal during a business trip.

If you are taking a trip but it’s for a combination of personal and business, you will need to calculate how much is used for business and only submit that amount as allowable expenses.

Office Costs

postage expenses

There are many items that can be listed under allowable expenses whether you work from premises or your own home. It’s a little more complicated when you work from home which I will explain later.

The type of things you can possibly include are;

  • Stationary
  • Printing costs (including ink)
  • Postage

You can claim for equipment such as computers, printers and software but this may have to be claimed under your capital allowance if you don’t use cash basis accounting.

With regards to your premises, the following may be allowed;

  • Rent
  • Maintenance & repair
  • Utility bills
  • Property insurance & security.

If you work from home, you may be able to claim for a proportion of your utility bills, but you will need to work out what proportion is used for business and what is used personally.

Stock Costs

stock expenses

Your allowable expenses for your stock may include;

  • Stock held
  • Raw materials
  • Costs incurred from producing goods

Marketing Costs

marketing expenses

Most businesses need to budget for marketing costs and this is taken in to account when it comes to allowable expenses. They may cover the following;

  • Newspaper adverts
  • Directory listings
  • Mailshots
  • Free samples
  • Website

You may also be able to claim for certain subscriptions. An example of these would be;

  • Membership to trade bodies or professional membership organisations
  • Subscriptions to trade or professional journals

Legal & Financial Costs

legal expenses

There are some fees that are essential in business and they may be covered under allowable expenses. For example;

  • Accountancy fees
  • Solicitor fees
  • Bank, overdraft and credit card charges (If used for business)
  • Interest on business loans
  • HP interest and leasing payments
  • Business insurance such as Public Liability Insurance

Other items that may be covered are;

  • Uniform or PPI
  • Staffs salaries
  • Bonuses
  • Pension contributions
  • Benefits
  • Agency Fees
  • Employer NI contributions.

This is just a guide and more information can be found on the gov.uk website. The most important thing to remember is that you will always need to prove these expenses so remember to keep a record of all receipts and invoices.

Outsourcing is actually a very realistic option for business owners so don’t be scared. If you’re still not sure, Rosemary Bookkeeping are more than happy to come and do a 1-2-1 health check with you and give you the opportunity to decide for yourself if you think you could benefit with no obligation, contact your local Rosemary Bookkeeper today.

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