Let’s keep it simple: If it’s wholly and exclusively for the business, there is a good chance you can write it off for tax purposes. But that doesn’t mean everything you buy while running a business is tax deductible.

We get asked this question every week, so here’s a simple guide to what you can and can’t claim.

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First, what is a business expense?

A business expense is anything you spend money on for the day-to-day running of your business.

If Revenue sees it as necessary to earning your income, it’s generally allowable.

That means it can reduce your tax bill — but only if:

• It’s used for business purposes, and
• You keep a receipt (or record) for it.

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10 Common Business Expenses You Can Write Off

Here’s what most self-employed people and small companies claim:

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What About Home Office Costs?

If you run your business from home, you may be able to claim a portion of your household bills. However this depends on the following:

• The amount of time you work from home, and
• Whether the space is exclusively used for business (e.g. a dedicated office vs. the kitchen table)

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What can be claimed?

You may be able to write off a reasonable portion of:

• Electricity and heating
• Broadband
• Rent (if applicable – e.g. a larger property is being rented in order to facilitate the home office)
• Home insurance (partially, where relevant)

Limited company directors:

Your company can pay you a flat-rate e-working allowance of up to €3.20 per day (tax-free) if you regularly work from home. However, this must be properly recorded and the company must have a physical office separate from your home.

You can’t claim mortgage interest or rent via the company directly.

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How much can I claim?

There’s no fixed rate. However Revenue expects it to be reasonable and justified.

Example:

If one room out of five is used as an office, that’s 20%.

If it’s only used half the week, your allowable portion may be 10%.

Keep clear records. Don’t stretch the claim unless you’ve got the space and usage to back it up.

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What About Cars and Mileage?

If you use your personal car for business (e.g. site visits, meetings):

• You can claim mileage at Revenue’s approved rates (once certain conditions are met),
  OR
• You can claim a proportional share of actual car expenses (fuel, insurance, maintenance)

But remember:

You cannot claim for commuting i.e. driving from home to your regular office isn’t a business journey, even if you’re self-employed.

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Common Expenses You Can’t Write Off

Let’s clear this up, as these are often asked about but not claimable for tax:

• Your own wages or drawings (if you’re a sole trader)
• Normal clothes (unless it’s safety gear or a branded uniform)
• Lunch you buy for yourself
• Parking fines or penalties
• Family holidays (even if you checked emails)

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What About Receipts?

You must keep receipts or proper records for all your expenses.

You have can have as sophisticated or as simple a process as you like.

This helps to keeps you audit-ready. 

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Final Tip: When in Doubt…

Ask yourself:

Would I have bought this if I wasn’t running a business?

If the answer is no, there’s a good chance it’s allowable.

If it’s yes, check the rules or run it by us.

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Want help getting your expenses in order?

If you’d like help managing your accounts, or staying compliant, get in touch with us at HTH Accountants — we’re here to help and to make it simple!