As a subcontractor, it can be difficult to know which of your expenses are allowable for tax purposes, and are therefore able to reduce your tax liability or increase any repayment due. Below are common expense categories, and the associated costs within them which can be claimed:
Materials, equipment, tools etc.
This is the most easily identifiable category, and covers the materials and equipment you have used on site. This also covers the cost of maintaining your tools/ equipment, and any insurance costs associated with this. It is also beneficial to separate out those tools and equipment which will be used for a substantial amount of time within the business (over one year).
You can claim the business proportion of your motor expenses, such as petrol/ diesel, insurance, road tax, MOT and servicing. For example, if 80% of your total mileage is business mileage, 80% of these costs can be claimed.
Alternatively, it may be more beneficial, or easier, to claim the mileage allowance. You simply claim 45p per mile for the first 10,000 business miles, and 25p per mile thereafter.
If you have a van and a car you may be able to justify 100% of van costs and a proportion of car costs.
This is an often misunderstood area in the construction industry. Allowable expenses are mainly protective clothing and equipment, such as helmets, steel-capped boots, goggles, overalls and high- visibility jackets. The laundry costs of cleaning protective clothing are also allowable.
However, you cannot claim for the cost of normal clothing worn at work, nor the laundry costs
associated with these.
Phone, stationery etc
You can claim the business proportion of telephone (home and mobile) and internet costs. This proportion is likely to be different to your motor expenses proportion. You can also claim for stationery costs used within the business, such as paper, stamps and printer ink.
Use of home
You may prepare quotes and invoices, or buy business materials, whilst at home. You can claim a proportion of your home bills using our ‘Use of home claim calculator’ in the Downloads & Forums section of our website.
If this is unpractical or too time consuming, you can claim a flat cost of £10 per month, assuming you work from home for 25 hours or more per month.
If a family member assists with administration such as bookkeeping, they can be paid a reasonable remuneration, which must comply with HM Revenue & Customs RTI rules and go through the business’ payroll. It is important to remember that the family member will have to be taxed on any remuneration due to them.
If you do require any additional support to help you and/ or your business, then please call our offices on 01865 379272, and one of our professionals will be happy to help you.