Today’s blog is more a ‘top tip’ than a ‘how-to guide’ because not many people know this but you can actually claim for bank charges when you’re self-employed as a claimable expense in your end of year tax return! Many people are in sheer disbelief when I tell them this but you can claim 100% of your business bank account charges as claimable expenses within your tax return each year.
Reclaiming Bank Charges when Self-Employed
So here’s the bottom line, HMRC list bank charges under one of their allowable expense categories which is entitled ‘Bank, credit card and other financial charges’. So the main thing to remember is to put any charges the bank have given you under this heading within your end of year tax return and that amount will be deducted from your business income – great isn’t it! Just be sure that you only claim bank charges which have been made against your business bank account. The one thing HMRC are really hot on is the ‘business use proportion’ of claimable expenses, so please don’t try to claim any charges you’ve received within your personal bank account, it just won’t be allowed! Only claim for the business bank charges and you’ll be fine.
One other aspect to bear in mind is that it’s not only bank charges that can be claimed here, it includes quite a variety of charges including:
- Bank, overdraft and credit card charges
- Hire purchase interest and leasing payments
- Alternative finance payments
So if you have been charged ANYTHING listed above in relation to your business then be sure to add it into your tax return under the heading ‘Bank, credit card and other financial charges’. As always be sure that you only claim for charges which are wholly and exclusively for the purpose of your business, for example the interest on a business car lease is 100% claimable but the interest on a personal car lease that you only use occasionally for work isn’t 100% claimable, instead you could only claim the percentage of business use (i.e the amount of miles you travel for business). If you’re unsure as to how you do this then be sure to check out my other blog all about how to calculate the business use percentage.
It’s as simple as that! So as I said it’s more a top tip to remember that if you ever see any charges appear in your business for banks, overdrafts, credit cards, hire purchase, leasing or finance then you are completely within your right to add these costs as claimable expenses.