Many SMEs missing out on millions in expenses and tax relief
14th April 2016 | News
Almost £250 million of freelancer and small business expenses with individual values of £10 or less are going unclaimed by UK SMEs every year, according to a new study.
From an aggregated sample of 2.5 million expenses logged by FreeAgent customers in 2015, worth a total of £168 million, the company found that the average small business owner has an average of £216 worth of expenses each year with individual values of £10 or less.
In a recent survey of 100 web professionals recently carried out on behalf of FreeAgent, more than a fifth (22 per cent) of respondents said they didn’t believe it was worth claiming any expense costing £10 or less.
When this data is extrapolated across the UK’s estimated army of five million small businesses, this equates to approximately £238 million in unclaimed expenses and tax reliefs worth £10 or less.
The survey also reveals that another 14 per cent of small business owners and freelancers would not bother claiming expenses if they were worth less than £5, suggesting that the total amount of expenses actually being left unclaimed in the UK could be even higher.
Almost two-fifths (39 per cent) of survey respondents stated that they claim back all of the expenses they incurred for their business. More worryingly, five per cent of respondents admit they don’t claim any of their business expenses whatsoever.
Ed Molyneux, CEO and co-founder, FreeAgent, said: “It’s surprising how few web designers and developers in the UK actually do claim everything back, and how many ignore and dismiss certain expenses for being so small.
“Whether it’s £5 or £500, that’s all money which you can claim tax relief on, and in the case of the smaller expenses, it’s also money that quickly adds up.
“We found that nearly one-in-four micro business owners wouldn’t claim expenses worth £10 or less, presumably because they’re too small to bother with or it takes too much time to log them, and that suggests hundreds of millions of pounds are going unclaimed across the whole of the UK.”