There is no way you can start your own venture without incurring a cost. Many of the costs start before your business activity begins. Expenses that you incur seven years before your business commences are treated as expenses on the first day of trading, and you can deduct them from the first account period of your business.

Besides this, you should be aware of other business expenses that you can deduct from your taxable profits. These expenses cannot include any money you take from the business to pay for personal purchases.

In case you run a limited company, there are different rules for allowable expenses. You can deduct business expenses and costs from the taxable profits, but any item that is used for personal use should be reported as a company benefit.

Allowable expenses you can claim

Here are some of the allowable expenses that you can claim:

• Travel costs, like bus fare, fuel and parking
• Office costs, like phone bills and stationery
• Clothing costs, such as uniforms
• Staff salaries and subcontractor costs
• Raw materials and stock
• Insurance
• Bank charges
• Heating, lighting and business rates
• Advertising and marketing costs

If you are unsure whether a cost comes under the purview of allowable expense, consult your accountant or call up the Self Assessment helpline.

Capital allowances you can claim

If you are using traditional accounting system, you can claim capital allowances when you buy anything to use in your business. This includes machinery, equipment, and business vehicles, like vans, lorries and cars.

In case you use cash basis accounting system and you buy a car for business use, it can be claimed as capital allowance. Any other item you buy is considered allowable expense and should be claimed in the usual manner.

On the other hand, if you use something for personal and business reasons, you can claim just the amount for business expenses. For instance, if you use your mobile phone for business and personal use and you spend £100 for personal calls and £90 for business calls, you can claim just for £90 and not the entire amount.