Research and reports
If you’re self-employed, most of your business expenses can be claimed back against your tax bill each year.
However, new research suggests that many small businesses aren’t sure which expenses they can claim for, potentially costing them thousands of pounds each year.
A survey of over 1,200 small business owners by The Accountancy Partnership found that 81 per cent don't understand what qualifies as a legitimate business expense.
It estimates that around one in ten small businesses have no idea what they can and can’t expense.
The survey found that 65 per cent of participants had failed to file a business expense in the past, with losses ranging from less than £100 to more than £10,000.
Here’s a breakdown of how much small business owners estimate they lose each year due to unclaimed expenses:
Percentage of small businesses to estimate loss
Less than £100
£100 to £499
£500 to £999
£1,000 to £2,499
£2,500 to £4,999
£5,000 to £10,000
More than £10,000
Although the majority of small businesses lost less than £500 due to unclaimed expenses, this could add up to a significant amount over a number of years.
The Accountancy Partnership estimates that all UK small businesses lose a total of £5.6 billion each year due to unclaimed expenses.
Small business owners are least likely to claim expenses for:
Even though these costs usually count as allowable business expenses. For example, you can claim business premises expenses for rent, utility bills, and property insurance. You can also claim travel expenses for vehicle insurance, fuel, and breakdown cover.
Small business owners are reminded that even strange expenses can be claimed for – as long as HMRC sees them as genuine and reasonable.
Survey respondents named the most unusual expenses they'd claimed for, including two live lobsters, a Venus flytrap plant, and a full Lederhosen outfit.
Alongside not being sure what counts as an allowable expense, small business owners admitted to several other reasons why they failed to make a claim. These included:
To make sure you’re making the most of allowable business expenses, read our in-depth guide on self-employed expenses.
It defines allowable business expenses, explains what you can claim on tax, and shows you how to add up your self-employed expenses.
Are you aware of which business expenses you can and can’t claim for? Let us know in the comments below.
Conor Shilling is a Copywriter at Simply Business with over two years’ experience in the insurance industry. A trained journalist, Conor has worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specialises in the buy-to-let market, landlords, and small business finance.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2023 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.