Freelancers could be missing out on more than 50m in tax relief by ignoring small expenses
New research by cloud accounting software provider FreeAgent has revealed that sole traders and micro business owners are missing out on millions of pounds each year by not claiming tax relief on minor day-to-day expenditure.
Just 39 per cent of the small business owners surveyed were confident that they claimed tax relief on all their allowable expenses with one-in-five neglecting to claim back the cost of any expenses at all.
The survey revealed that across the whole UK economy, almost 250m worth of expenses with individual values of less than 10 are being disregarded by freelancers. If all of these entrepreneurs were basic rate taxpayers, this would equate to 50m of foregone tax relief though with many likely to be paying 40 per cent tax, the total could be much greater.
whether it’s 5 or 500, that’s all money which you can claim tax relief on, and in the case of the smaller expenses, it’s also money that quickly adds up. We found that nearly one in four micro business owners wouldnt claim expenses worth 10 or less presumably because they’re too small to bother with or it takes too much time to log them, said Ed Molyneux, CEO and co-founder of FreeAgent.
“Even for a freelance business or small agency, those little expenses can end up being worth hundreds, or thousands, of pounds when they’re all combined so it’s strange that people seem to think it’s too much hassle or not worth the effort to claim these back, he added.
Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics as well as running a tutoring company.
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