Expenses cause headaches
According to research carried out by YouGov on behalf of online accounting provider FreeAgent, only one in four small business owners claim back all of the expenses they incur personally for their business.
In a poll of 500+ owners of companies with five or fewer members of staff, 26% of respondents said they claimed back every single business expense they incur - while 21% stated that they claimed back half of their expenses or less.
The poll also revealed that nearly three quarters of small business owners and freelancers have wider concerns about their taxes - with 73% of respondents saying that they felt anxiety about the current UK tax system.
According to Suneeta Johal, Research & Information Manager at PCG, the not-for-profit organisation representing freelancers, this research supports existing evidence that expenses and taxation in general are a concern for a large proportion of freelancers.
“Clearly freelancers are not claiming their expenses, and are worried about their taxes because they fear being challenged by HMRC or think there is too much admin involved. The last thing we want to see is freelancers losing out on money or people being deterred from freelancing because of complicated process and these results do seem to suggest that current taxation rules are too complicated and that improvements need to be made.”
According to the survey however, the blame for unclaimed expenses cannot solely be attributed to a complex and confusing system. In fact, the most common reason for people not claiming what is rightfully theirs appears to be simply apathy. 41% of respondents admitted that they don’t claim back expenses that they didn’t see as worth the bother. In addition, 35% admitted that lost or forgotten receipts were a major reason for them not claiming, something Suneeta Johal feels could be a missed opportunity.
“Every penny counts is a cliché, but when it comes to expenses it is definitely good advice. While small amounts may not seem worth the bother at the time, over the course of a year they can add up to a small fortune.”
For Ed Molyneux, CEO and founder of FreeAgent, the key to avoiding missing out is to get organised. “While a simplification of the UK tax system for those who run small businesses would provide some relief, I think many of these people will also benefit from using new technology designed to help them manage their finances more effectively. Today’s accounting systems, based online and accessible via smartphone, help save time and reduce the amount of administration they have to do.”