A new report has found that UK freelancers, sole traders and micro-businesses could potentially be failing to claim millions of pounds worth of tax relief from unclaimed expenses they deem too small or time-consuming to pursue.
Research conducted by FreeAgent, a cloud accounting software provider, has revealed that around a quarter of a billion pounds’ worth of expenses with individual values of £10 or less are not being claimed by UK micro-business owners every year.
Using an aggregated sample of 2.5 million expenses worth a total of £168 million in 2015, the report’s calculations indicated that the average micro-business owner accumulates around £216 worth of expenses with individual values of £10 or less every year.
A similar survey of 100 web professionals revealed that nearly a quarter (22 per cent) of respondents said they did not think it was worth claiming any eligible item that cost them £10 or less as an expense.
By combining the two pieces of research, it has been estimated that across the UK’s 5 million micro-businesses, approximately £238 million of small expenses remain unclaimed each year.
In addition, just 39 per cent of those surveyed said that they claimed back all of the expenses they incurred for their business, while one in every 20 respondents (five per cent) admitted they didn’t claim any expenses at all. This suggests that businesses could potentially be losing out on thousands of pounds each year in tax relief.
Milsted Langdon can identify minor expenses claims and assist you with tax returns and bookkeeping, for which we provide an online digital service for ease of access.