Travel and Expense
What Business Expenses Can You Reclaim Tax On?
For a typical business there are many everyday outgoings, whether it’s staffing costs, travel, equipment or office renovations. Knowing which of these are allowable business expenses that you can reclaim VAT on will make completing your tax return a lot easier.
Businesses are often reminded by HMRC of the importance of paying the correct amount of tax. But VAT reclaim also presents a huge opportunity for businesses as it can put valuable funds back into the bank. The problem is, the hassle of reclaiming VAT and the risk of getting it wrong often puts companies off, which can lead to a loss of potential profit.
Whether you’re just starting out or looking for further clarity about how to reclaim tax, we’ve put together some frequently asked questions that business owners tend to ask when filling in their tax return.
What Business Expenses Can I Claim Tax On?
Business expenses tend to be unique and far reaching within your organisation, and many of them you can claim back tax on. Here are a few examples; the list isn’t exhaustive but most businesses tend to incur these costs and don’t want to miss out valuable reclaim savings
- Office supplies – included in this category is stationery, phone bills and computer software your business uses for less than two years (or makes regular payments to renew the licence).
- Business premises – this typically covers rent, utility bills, property insurance, security, as well as any renovations made to the office.
- Travel – while you cannot claim on any cars, vans or motorcycles, you can claim on fuel, vehicle insurance, repairs, parking and breakdown cover. If employees need to travel, then they can claim back on hotel rooms and meals on overnight business trips.
- Staff costs – claim allowable business expenses for salaries, bonuses, pensions, benefits, as well as training courses related to your business.
What Data Do I Need for Accurate Reclaim?
To know which expenses to file for tax reclaim, you must first have visibility of all business expenses, which can be difficult if they aren’t all kept in one place. Concur Expense simplifies the process and speeds up the review, processing, payment and auditing of expense claims. Employees can digitally upload receipts to back up their claims, so you can be confident every expense you file has the evidence it needs. With Making Tax Digital (MTD) rules in the UK making it a legal requirement to provide digital copies of receipts, using an automated solution can save a lot of time and trouble down the line.
On top of this, Concur Tax Assurance by Blue dot uses AI and machine learning to automatically identify VAT-eligible expenses, validate receipts and optimise reclaim potential. This enables businesses to keep up with changing regulations, increase compliance and maximise profitability, as well as giving your employees tools which will make their jobs easier.
Can I Reclaim VAT from Previous Tax Years?
If you incur business expenses that your company will reimburse you for, generally you are required to submit those expenses in the same tax year they were purchased. If you are claiming tax relief for business expenses that your company does not reimburse, you must claim within 4 years of the end of the tax year that you spent the money. If your claim is for previous tax years, HMRC will either make adjustments through your tax code or give you a tax refund.
Are There Any Other Tax Reliefs to Look Out For?
In addition to business expenses, there are a few other ways to claim tax rebates, if you qualify. One of the most popular rebates is the Research and Development (R&D) Relief. The R&D Relief support businesses that work on innovative projects in science and technology and you may be able to claim Corporation Tax relief if your business’ project meets the definition. There are also reliefs for creative industries, in particular if your organisation makes a profit from theatre, film, television, animation or video games.
It's important to keep on top of the expense process so you know exactly where money is being spent within your business. Accurately reclaiming tax on these expenses will mean you won’t miss out on any potential profit and can budget more accurately. SAP Concur solutions can help provide visibility over these expenses, improve global tax compliance and maximise profitability.
Further Reading
- What Are Some of the Biggest Expense Types to Expect?
- Find out more about VAT reclaim here.