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This makes claiming expenses a hassle and often results in your tax bills coming as a shock.

Many contractors fall into the trap of storing up receipts and invoices to deal with later.

You’ll come away with a lower tax billand more actual cash in your business (increasing the value of your company and maximising the profits available for investment or drawing dividends). This might seem counterproductive, as claiming expenseswill eat into your company’s profits, however these expenses are deducted pre-tax and VAT, so they’ll improve the financial health of your company. The majority of the expenses you’ll incur will be tax deductible, meaning you can deduct them from your business’s profits. This could be travel expenses, phone and internet bills, and in some cases even a proportion of your utility bills if you work from home. What are business expenses?Ī business expense can be anything that you purchase that is deemed necessary for the everyday running of your business. This guide will arm youwith all the information you need to understand what you can and cannot claim, how expenses will affect your tax bill, as well as detailing the process involved in making a claim, and the importance of keeping relevant records. By understanding HMRC’s rules and following some simple guidelines, you can ensure you’re maximising the tax benefits for your company. Many contractors believe that claiming expenses is complicated and time consuming, but it doesn’t need to be. He and his colleagues are very happy to speak with Listentotaxman visitors to discuss any tax questions they might have – just visit the Intouch Accounting website for contact details.

Patrick now writes for on matters relating to contractor and freelancer tax. This Guide was written by Patrick Gribben, contractor and freelancer Tax Expert at Intouch Accounting.