Following a recent survey by cloud accounting software provider “FreeAgent”, it has been revealed that sole traders and micro business owners are missing out on millions of pounds each year by not claiming tax relief on minor day-to-day expenditure.
Just thirty nine percent of small business owners surveyed were confident that they claimed tax relief on all their allowable expenses with only one in five neglecting to claim back the cost of any expenses at all!
The survey revealed that across the whole of the UK economy, almost £250m worth of expenses with individual values of less than £10 are being disregarded by freelancers. Even if all of these entrepreneurs were basic rate taxpayers, this would equate to £50m of foregone tax relief – of course, this total could be much greater.
Ed Molyneux, CEO and co-founder of FreeAgent, said;
“Whether it’s £5 or £500, that’s all money which you can claim tax relief on, and in the case of the smaller expenses, it’s also money that quickly adds up. We found that nearly one in four micro business owners wouldn’t claim expenses worth £10 or less – presumably because they’re too small to bother with or it takes too much time to log them.
“Even for a freelance business or small agency, those little expenses can end up being worth hundreds, or thousands, of pounds when they’re all combined – so it’s strange that people seem to think it’s too much hassle or not worth the effort to claim these back.”
Research carried out by another Company on behalf of HMRC a few years ago found that claiming for expenses was seen as the most difficult aspect of tax returns by small business owners.
Are you claiming all of the Tax Relief that your business is entitled to?
Half of micro firm owners were uncertain about what was and was not allowed as a claimable expense. One in five believed they couldn’t deduct any of the cost of expenditure used for both personal and business use, when in fact HMRC guidance states that such costs should be allocated to the business on “fair and reasonable” basis.
If you need help understanding what you can and can’t claim, call Omni Chartered Accountants today on 01902 837 408 for free of charge, impartial advice. Our mission is to save you money!