Expenses set to get simpler
Sole traders and business partnerships are advised that changes to the way expenses may be claimed against taxable income have now taken effect (www.gov.uk/simpler-income-tax-simplified-expenses).
The new simplified expenses regime is part of the Finance Act 2013, which came into force in July, and now offers the option of claiming flat rate deductions for expenses relating to business use of vehicles, business use of a home, or private use of business premises.
Although eligible businesses are not under any obligation to use the new system, if they decide it suits then they may start claiming simplified expenses from the 2013/14 tax year. The regime is not available to limited liability partnerships or limited companies or partnerships involving limited companies.
Businesses using the simplified expenses system will need to record their relevant business mileage, hours worked at home and/or how many people occupy the privately used part of their business premises over the year. At the end of the tax year, they will then calculate allowable expenses relating to these using the flat rates provided by HM Revenue and Customs (HMRC).
If you are unsure of your eligibility for this new system, or whether it will benefit you, then it is best to seek early advice. The new flat rate choice may not suit everyone, as keeping detailed logs of miles, hours and days may be more onerous than keeping bits of paper when you buy things and making appropriate business use apportionments.
For further information, please contact James Cornthwaite at the office.
Author: James Cornthwaite FCA CTA
A former pupil at St Aidan’s C of E High School, James attended Blackpool Sixth Form College and Lancaster University, graduating in 2004, gaining BSc. first class honours. He joined Moore and Smalley, Preston in 2005 and qualified as a...
Add your Comment
We have the ability to edit and/or delete posts and comments. Links should be relevant to the topics. Please note all comments are subject to review before inclusion.