Many small businesses are failing to claim millions in expenses and tax relief claims FreeAgent study

Most accountants have long known that many small businesses are failing to claim the full expenses entitlement when filing their tax returns: however, what has not been known is exactly how much freelance workers and micro-businesses are failing to claim. That is, until now. According to a new study by accounting software company, FreeAgent, the total figure small businesses are losing by not claiming business expenses with individual values of £10 or less is almost £250 million.

So where did this figure come from? Well, FreeAgent took an aggregated sample of 2.5 million expenses logged by its customers in 2015. Using that data FreeAgent found that the average small business owner failed to claim an average of £216 worth of expenses each year with individual values of £10 or less. According to the company the aggregated figure was worth more than £168 million.

In another recent survey of 100 web professionals carried out on behalf of FreeAgent, the company also learned that more than a fifth (22 per cent) of respondents said they didn’t believe it was worth claiming any expense costing £10 or less. Extrapolating this data across the UK, FreeAgent estimated that five million small businesses were failing to claim approximately £238 million in unclaimed expenses and tax reliefs worth £10 or less.

What’s more, the survey also discovered that 14 per cent of small business owners felt it was a waste of time and not worth the bother claiming expenses if they were worth less than £5. More worryingly, five per cent of respondents admitted they didn’t claim any of their business expenses whatsoever. The upshot of this FreeAgent suggests is that the total amount of expenses actually being left unclaimed in the UK could amount to nearer £250 million.

Speaking about the survey, Ed Molyneux, CEO and co-founder, of FreeAgent, said:

“It’s surprising how few [small businesses] web designers and developers in the UK actually do claim everything back, and how many ignore and dismiss certain expenses for being so small.”

“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 wouldn’t claim expenses worth £10 or less: presumably because they’re too small to bother with or it takes too much time to log them, and that suggests hundreds of millions of pounds are going unclaimed across the whole of the UK.”

If your small business would like further information on claiming business expenses or would like help with any other tax matter, then contact Steven Glicher accountants on 0161 485 8007 or email info@stevenglicher.co.uk.

News / Blog

13th
December

Autumn Budget 2017 – Business Tax Implications

Since the budget statement in November, a number of further details have been released. This week, we have a look…

5th
December

Review of the Budget – 2 Weeks On

It’s been two weeks since the Autumn Budget. Our initial reactions remain the same, but with more information published in…

30th
November

Cloud Accounting – Soon To Be A Necessity For All Businesses

There are a number of implications for Stockport small businesses that came out of last week’s budget. We will be…

22nd
November

Autumn Budget 2017 – Initial Reactions for Small Business

The Autumn budget is out. The Chancellor of the Exchequer, Philip Hammond MP has delivered his Autumn Budget 2017 speech…