One of the most common questions we get asked is ‘What can I claim as a business expense?’
A business expense is basically a cost to a business that reduces its profits and therefore reduces its tax liability. The technical answer to the question is that the expense has to be ‘wholly and exclusively for business use’ however in the new media industry this is often difficult to interpret.
Certain expenses are never allowable for tax purposes, these include:
- Business entertaining – including eating/drinking out with clients or suppliers
- Costs and fines for breaking the law – parking, speeding etc
- Capital loan repayments
- Personal expenditure – including mortgage payments or rent on your residential home
The key to whether most expenses are allowable is ‘are the expenses justifiable to HMRC as a business expense?’ I think it would be hard to convince HMRC that a trip to Vegas with your friends was ‘wholly and exclusively’ for business purposes! I have however put a brief list of industry specific examples which would be allowable:
- Equipment – Computers, Lighting, Camera, Microphone, Consoles etc.
- Event related – Travel costs, Subsistence (Food and Drink), Hotels, Taxis etc.
- Video related – Games, activities specifically for the purpose of a video, props, extras etc.
- Freelancers – If you pay anyone for websites, editing, thumbnails etc.
- Travel – Any costs travelling to or from business related meetings or events can be claimed. This includes trains, planes, taxis etc. Personal holidays are not allowed
If you have any queries on business expenses or would like to chat anything through, please get in touch with Sam Uwins.