Half of UK business owners feel ‘overwhelmed’ with the amount of paperwork they need to deal with.
One in five believe this has led to a slowing in the growth of their business, and 29 per cent have suffered a personal financial loss from not filing all the paperwork they can with the taxman.
Another fifth feel so bamboozled by mountains of forms they haven’t claimed tax relief as a result, potentially costing their businesses thousands.
Directors of UK companies believe their businesses have lost an average of £17,907 each due to tax relief confusion, while fifteen per cent haven’t claimed in the past due to a complete lack of understanding of financial jargon.
The research which spoke to 500 businesses also found just under half of those polled don’t believe they have made all the claims their business is entitled to. And a quarter were unaware claiming business expenses could reduce their Corporation Tax bills.
Rebecca Freeman, qualified accountant at digital bookkeeping app Receipt Bank said: “Tax breaks seem complicated, but there are a few simple rules everyone can follow.
“Read up on what you’re entitled to, particularly if you work at home or your office is based in a rural area. As a general rule keep digital records of all your business expenditure – your accountant can help with the hard bits around entitlement.
“Tax breaks exist to help small businesses invest and grow; businesses that forgo their entitlements are putting themselves at a competitive disadvantage.
“By claiming every allowable expense, you’re making sure you don’t pay a penny more in tax than you have to.
“Unfortunately as we’ve found, not all new business owners are clear on the rules, and this can lead to them missing out.”
The study found more than half of those running a limited company (1.3 million limited companies in the UK) didn’t realise they could claim back money if their office was based in their home.
Six in 10 owners didn’t know they could claim for relief on medical insurance or pension payments for employees, while a further 47 per cent didn’t realise they could claim for staff training, and 68 per cent wouldn’t know to put through staff events.
More than 50 per cent also didn’t realise charity donations, mileage or legal fees are also tax deductible. However, 18 per cent have mistakenly tried to put through everyday work clothes as tax relief – genuinely believing they were allowed. A further one in 20 cheeky owners polled via OnePoll have attempted to claim for home furniture, dental work – and even vet fees for the office pet.
Rebecca Freeman for Receipt Bank added: “There are very obviously some items you can’t claim for – although it would seem some are happy to try. If you’ve bought a work shirt from Next, that’s not tax deductible. But if you own a company and the uniform has your logo, then it is.
“The taxman is quite clear with what you can and can’t claim for. But you’d be surprised with the things you can – from Christmas parties to business mileage – all these costs add up and every little helps.”