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Small business owners across the country are losing thousands of pounds a year on unclaimed expenses. Could you be one of them?

Knowing exactly what you can and can’t claim for is one of the biggest barriers to reclaiming what you’re owed, but it’s not always an easy process.

That’s why it’s so important to work with a trusted chartered accountant like Fresh Clarity.

We’ve rounded up six of the most common unclaimed expenses and credits, which total a startling £43,910.

Not an amount you’d be too keen to lose, we’re sure!

So here’s what you might be missing out on, and some top tips to make sure you reclaim every penny you’re eligible for in future.

 

£200 per year on business insurance 

What you might missing

Around £200 per year on Professional Indemnity or Public Liability Insurance

Why it’s happening

Most businesses need some form of business insurance. Typically, it’s Professional Indemnity Insurance, which can cost anywhere between £45 and £1,500 per year.

There’s also Public Liability Insurance, and a range of trade-specific policies from Builders Insurance to Cleaning Insurance. All of these policy types are tax deductible, but are sometimes overlooked in tax season.

How to put it right

Comb through your business policies and add them all up; whether you pay annually or monthly, make sure they’re fully tracked and listed on all your tax returns.

Using the right software, like Quickbooks or Xero, can really help you keep track of recurring expenses and make sure they’re not missed.

 

£216 per year in minor expenses 

What you might missing

At least £216 per year in minor expenses of £10 or less

Why it’s happening

The average UK small business apparently loses at least £216 every year due to unclaimed ‘minor’ expenses.

We get it – when you have a small expense of £10 or less, it almost doesn’t seem worth the effort of claiming tax relief on it.  You might be spending peanuts, but it all adds up and over the years it’ll equal thousands.

How to put it right

The key here is keeping track of your receipts, large and small.  Shoving them all in a shoebox (as a surprising number of people still do!) isn’t the solution; it’ll leave you stressed and confused at the end of the tax year.

We recommend the Dext app – it lets you capture, upload and keep track of all your receipts so you don’t miss a single thing.

 

£499 per year on clothing, vehicles and premises costs 

What you might missing

Up to £499 per year on lesser-claimed expenses

Why it’s happening

Research from The Accountancy Partnership revealed that 35% of the UK’s small and medium-sized businesses were missing out on around £500 worth of expenses per year because they didn’t realise they could claim.

A further 13% were missing out on up to £1,000. The items people aren’t claiming for? Work clothes, food and drink, hire purchase, vehicle expenses and premises costs.

How to put it right

Remember that you can claim business premises expenses for rent, utility bills and property insurance. If you use your car to travel to meetings or for other work purposes outside your commute, you should be claiming for mileage.

While you can’t claim for your ‘everyday work wardrobe’, you can claim on uniforms and health & safety workwear such as steel toe capped boots…

 

£1,500 per year on the Christmas party 

What you might missing

Around £1,500 per year on staff social events

Why it’s happening

If you’re a limited company and you’re out to impress, you might choose to take a client to a big sporting event or treat them to dinner at a top restaurant – but neither of these expenses are tax deductible.

In fact, ‘business entertainment’ costs, including client gifts, are a no-go for tax relief. When it comes to entertaining your team, however, it’s a different story.

How to put it right

Limited company business owners may not realise they can claim tax relief on the cost of hosting an annual event for all their employees – as long as it’s no more than £150 per head.

As the average small business employs around 10 staff, that could add up to a lot. Even if you don’t do Christmas parties (which, to be honest, we totally get), an annual event like a garden party or a day out could be a morale-booster you don’t want to miss.

 

£10,000 on research and development

What you might missing

Up to £10,000 per year on the government’s R&D tax credits

Why it’s happening

The government’s tax relief scheme for small businesses involved in research and development has been around for over 20 years.

It’s designed ‘to encourage innovation and competitiveness by allowing businesses to reclaim money invested in qualifying R&D work’. Yet only 1 in 10 eligible businesses are actually claiming; around £15bn in tax relief still lies unspoken for.

How to put it right

You do need to be a limited company that’s subject to Corporation Tax, and obviously, the scheme only applies if you’re engaged in relevant R&D activities.

But if you’re spending any money on innovation, you could be eligible to claim back a cash payment. The scheme spans a very broad range of sectors, from wineries and apparel makers to IT businesses and printers – so it’s certainly worth checking the criteria.

 

£31,495 of annual revenue in unclaimed tax

What you might missing

Up to £31,495 in lost revenue due to the VAT return process being too complicated

Why it’s happening

Earlier this year, a study by SAP Concur found that UK SMEs are missing out on up to 12% of their revenue by failing to reclaim VAT because the process was too complicated.

This process, coupled with the post-COVID landscape of VAT deferrals and the changing regulations, mean businesses simply see it as ‘too much hassle’.

But it’s a hassle that could be worth thousands. If the average small business turns over £262,458, you’re looking at up to £31,494.96 in lost revenue.

How to put it right

VAT returns are indeed complicated. It’s a fast-moving landscape with lots of variables, and if you don’t know exactly how it works or what you’re eligible for, you could easily be losing thousands.

The only way to address this is to enlist a professional. A good chartered accountant will be up to date on all the latest tax changes, and help you make sure you’re not missing out on a penny.

If you’re worried about missing out on unclaimed expenses, now could be the perfect time to get some fresh clarity on your finances. Book a free Discovery Call with Louise today to find out more.

The Fresh Clarity Team