Both Limited Companies and Sole Traders are able to deduct the cost of Allowable Expenses from your taxable profit to bring down their tax bill.
Allowable Expenses are the essential running costs of operating your business and include the following.
From desks and computers to stationery, most office purchases are Allowable Expenses.
Your rent, utility bills and maintenance costs qualify as Allowable Expenses, but if you run your business from home you will only be able to include part of your home utility bills.
Phone, internet and even postage costs are Allowable Expenses.
This covers vehicle hire, fuel, parking, flight and public transport costs, other than for commuting. If the business provides the vehicle itself, that is classified as a Capital Allowance, which is an asset, not an expense. It will still be deducted from your taxable profit but it works slightly different to Allowable Expenses.
Tools and Equipment
Not including plant and machinery, which are business assets and considered Capital Allowances, smaller tools and equipment are Allowable Expenses.
This includes salaries, pension contributions and employer NICs, as well as subcontractor costs. You can also include the costs of training courses or materials.
Advertising and Marketing
These Allowable Expenses include print marketing and adverts as well as website and online marketing costs.
If you provide uniforms or reimburse employees for work clothes, these qualify as an Allowable Expense.
Legal and Financial Costs
This includes lawyers fees, accountancy services, bank charges, interest and even accounting software.