We’ve all heard of tax deductible expenses – some people think everything’s tax deductible, others are extremely cautious and think nothing is tax deductible – but what is actually tax deductible? As someone running a business, you need to know which expenses are tax deductible and which are not. Here are some common examples where confusion can arise.
Clothes
Clothes are only tax deductible if it’s a uniform or safety gear. Clothes that you wear to work, that you could wear elsewhere (even if you don’t), are not tax deductible. A good rule of thumb – anything that could potentially be worn for other purposes is not tax deductible.
Car expenses
If you use your vehicle for work, then vehicle expenses are tax deductible. However, your commute from your home to work is not tax deductible. If the vehicle is solely used for work, you can deduct all the costs such as registration, maintenance, and insurance costs. If you use your vehicle for both work and private use, you can only claim a portion.
Meals on a business trip or shouting clients
Entertainment expenses are something that trips a lot of people up. Entertainment can be food and drink, social events, trips, accommodation, privileges, musical, sporting or theatrical events, and freebies. Some entertainment expenses are 100% deductible, and some are only 50% deductible. This can be confusing, so get in touch with us to help you work out what you can claim.
Working from home
If you work from home, you can claim a portion of household expenses, including:
- rates
- electricity
- home and contents insurance
- rent, or the interest portion of your mortgage repayments.
The amount you can claim varies depending on how much of the house you use for your business. We can help you calculate this and ensure the right portion of expenses are claimed as a tax deductible expense.
Subscriptions
Some subscriptions are tax deductible. If you subscribe to work-related magazines, journals, or professional association memberships then these are all tax deductible.
Mobile phone
If you have a dedicated business phone (mobile or landline), it’s 100% deductible. If you’re using it for both work and non-work activities, then it will be partially deductible.
Need more specific advice?
You’re an expert at what you do, we’re the experts when it comes to tax. If you’re unsure if something is tax deductible, then get in touch with us – we can help you sort out your tax questions