Expense Receipts: Everything you need to know

It’s a good idea to keep hold of all of your business’s expense receipts. They help to provide you with an accurate picture of your financial state which eases the process of filing your tax return. Furthermore, it will come in handy if HMRC asks about your tax affairs.

Generally, small businesses should save receipts for at least five years after submitting their Self Assessment tax return for the given tax year.

expense receipts

What are expense receipts?

Expenses are the costs associated with running a firm, and they contribute to the activities involved in making a profit. Tracking expenses is a vital part of assessing your company’s financial health. 

Expenses include:

  • Staff wages
  • Advertising charges
  • Tax expenses
  • Insurance
  • Water and electricity
  • Equipment/machinery
  • Fuel
  • Any other products, activities, or assets essential to running your business.

All expenses incurred by a business during a specific accounting period are recorded on an income statement. An income statement is sometimes known as a profit and loss statement (P&L statement). To analyse your company’s fiscal performance, you should have a basic grasp of the three main financial statements: the balance sheet, income statement, and cash flow statement.

What receipts should I keep?

Here are some tax-deductible expenses:

  • Staff costs: Salaries, salaries, bonuses, pensions, commissions, and other forms of pay provided to employees, independent contractors, consultants, and freelancers.
  • Office costs: Rent, utilities, phone bills, supplies, and other goods utilised for less than two years can be claimed as a business expense.
  • Training courses: Training your staff or giving courses relevant to your business.
  • Marketing costs: Website domain registration, hosting fees, pictures, brochures and flyers.
  • Insurance: Insurance or bank fees.
  • Food costs: Dinners with customers or employee lunches on official business trips are 50% deductible.
  • Entertainment costs: HMRC permits you to claim £150 per employee per year. However, this is not the same for sole traders.
  • Travel expenses: Fuel, parking, train or bus ticket. The cost of getting to and from work is not tax-deductible.
  • Clothing costs: Uniforms and safety equipment.
  • Material costs: Stock or raw materials.

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