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A Short Guide To Business Deductions

You have to spend money to make money, which every business owner and self-employed person will tell you, so it is essential that you accurately calculate and declare your business deductions for costs. This will mean that you only pay tax on the profits you make, rather than all money coming in. Knowing what can and can’t be deducted as a business expense can often leave people in murky waters, so we have created a quick guide to the basics of business deductions, to keep you in the tax man’s good books.

What is a business deduction?

To put it simply, anything that you spend money on that you reasonably need to run your business, such as:

What is off limits?

Whilst there are lots of expenses that can be deducted for business reasons, it is important to stay within the guidelines set out by HMRC. The following are a strict no-no when it comes to business deductions:

This is a basic guide and by no means exhaustive, it is always best to apply common sense if you aren’t sure on an item. If you are ever in doubt, speak to your accountant.

Submitting your expenses is simple, calculate your expenses to be deducted and complete your self-assessment tax return for the year. Whilst you should always keep a record of all of your spending, it is not necessary to send proof with your tax return, records are only required if HMRC request to see them, so better safe than sorry!

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