Claiming expenses is often a topic for debate as there can be some confusion on what expenses are allowable for tax purposes. Some may believe they can submit expense claims including their own personal expenses. Others just simply do not know what they are entitled to claim. The first step towards claiming allowable business expenses is to keep a detailed track of them.
If you're self-employed in Ireland, then you're obliged to file a self-assessed tax return, usually by the deadline of October 31 or by the pay and file deadline of Nov 10. Your tax return is used to declare income you earn and also to claim any tax allowances that can be offset against your tax bill.
We take the hassle out of filing your Irish tax return
You must file an Irish tax return if any of the following apply:
- You're self-employed
- You're a contractor or sub-contractor
- You receive income in addition to PAYE, e.g. investment portfolio, rental income, income from a construction trade, capital gains, consulting, contracting or if you receive any other untaxed income from ‘nixers’ or work you do in addition to your normal PAYE job
- You’re director of a company
- You belong to an employee share scheme
Tracking Your Expenses
A good way of monitoring the different expenses in your business is to keep record of them by using following methods and aids:
- Mileage records
- Bank statements
- Receipts for purchases
In order for an expense to be regarded as "allowable" for tax purposes, it must be directly related to the running of the business. Items such as mobile phones and cars can cause doubt as often people will hold these for their own personal use also. Only the usage which is directly related to the running of the business can be claimed.
You can claim for the cost of the day-to-day running of your business to include items such as:
- Purchase of goods for resale
- Wages, rent, rates, repairs, lighting and heating etc.
- Running costs of vehicles or machinery used in the business
- Accountancy fees
- Interest paid on any monies borrowed to finance business expenses/items
- Lease payments on vehicles or machinery used in the business
This is an allowable expense. Any equipment used specifically in relation to the running of the business may be reclaimable. Details of the usage and an explanation for its purchase will be required. In the case of an asset such as computers, a thorough examination will be conducted to ensure that it is being used solely for business purposes. Generally, capital allowances (tax deduction spread over a number of years) are claimed on the acquisition of equipment as this is treated as capital expenditure for tax purposes.
If you own a car that is used for both business and personal purposes, you are entitled to claim back a percentage of the actual running costs e.g. fuel, repairs, servicing etc, which relates to the business use.
The full amount of the business related expenses can be claimed against the SE income but the individual is required to keep the receipts for the expenses incurred.
i.e. travel from home to work cannot be reclaimed. However, if you travel between one place of work to another location where work is also being carried out temporarily, a portion of this tax may be claimed back.
There are certain expenses that cannot be reclaimed:
Personal mileage expenses – mileage that is not directly related to business is not claimable
Food expenses – food is a living expense. It is a basic need and is not related to business operations. In the case of an employee on a business trip whereby they are forced to eat out or incur food costs that would not be normal, an allowance may be given to cover these costs
Clothing costs – normal clothing even clothes worn to work are non-reclaimable expenses
Accommodation – the cost of accommodation is not allowable. Like food, shelter is a basic need
Client entertainment - although this may be a business expense, it is not an allowable deduction for tax purposes. Where an individual incurs genuine business expenses on networking/client entertainment, in most circumstances that individual can be reimbursed on a tax free basis by their employer, once the expenses are fully vouched and reasonable (strict Revenue guidelines must be adhered to). However the company or business will not be entitled to claim a tax deduction in respect of such reimbursements.
Staff entertainment expenses are deductible as long as they are reasonable
The above guidelines provide a comprehensive overview of the expenses that are claimable/non-claimable. However sometimes it may not always be clear cut. Taxback.com has a team of Tax Advisors who would be happy to help you - if you would like more assistance please do not hesitate to contact us.
The Irish tax year is Jan 1- Dec 31.
The deadline for submission of a self assessed tax return is 31st October following the end of the tax year in question.
The extended deadline for people who pay and file online is usually around 15 November i.e. just over 2 weeks after the paper filing deadline.
Some PAYE workers also have to file an Irish tax return.
We will provide you with a no obligation quote before proceeding with your tax return.