What Are Business Expenses and What Can You Claim For?

The way we work has been completely flipped on its head over the past two years. We’ve had to deal with all sorts of adversities, including how we navigate home working, the inevitable digital transformations for most companies and now, how we stay productive and streamlined as we head back to normal. 

Businesses may have had to temporarily change their policy throughout the pandemic to cater to employees’ needs while working from home. These changes may have left organisations wondering about how their expense policies may need to adapt in order to adjust to remote and hybrid working.

And it’s hard to know where to start when updating your T&E policies. To help, we’ve put together a few typical expense-related questions employees tend to ask when they’re starting out, so you know the parts of your policy to focus on first.

What Can I Claim as a Business Expense?
 

Business expenses come in all shapes and sizes and cover many areas across your organisation. Expenses are either bought and paid for by the company (eg. office rent, wages etc.) or are bought and claimed back by employees (eg. travel and expense (T&E) spending). Here are some examples that businesses typically see from employees:

• Travel
  • Train, bus, air and taxi fares
  • Hotel accommodation on business trips
  • Subsistence meals 
  • Visas
     
• Cars and vans
  • Insurance
  • Repairs
  • Servicing
  • Fuel

• Equipment and software
  • Computers
  • Phones
  • IT software
  • Tools (mouse, keyboard etc.)
  • Ergonomic equipment (desks, chairs etc.)

• Office running costs
  • Internet connectivity
  • Stationery
  • Printing
  • Postage

It’s worth noting that before the pandemic, the most popular business expense claims were travel related. However, this all came to a sudden halt and now, as businesses slowly re-introduce travel, there are a few things to consider:

Will your business offer sustainable alternatives to the chosen method of travel? Perhaps this can be written into policy now, or even promise to offset an employee’s carbon footprint. Consider whether things like parking charges, taxi fares and congestion charges would be allowable business expenses.

What Expenses Can I Claim While Working from Home?

If your business is planning to stick with a hybrid model of working, you may start receiving questions like “what expenses can I claim while working from home?” To give employees some clarity, outline exactly what they’ll be reimbursed for.

Keeping Your Expense Processes Up-to-Date with Flexible Working

Is your business equipped to manage expenses in a hybrid model?

See Guide

Some employees may decide to set up a permanent home office, for example, so will they be reimbursed for any furniture or any decorating costs to make the space more comfortable. On top of this, also consider smaller business expenses such as: postage, notebooks, pens, keyboards and desk lamps.

In the UK, HMRC has stated that it will allow employees to claim for a proportion of their household expenses if they’re working from home, such as: heating, electricity, council tax, rent and internet bills. As a limited business, you can claim £6 per employee per week on home working expenses from HMRC. Businesses with home workers based in Ireland can claim €3.20 per employee, per day.

What Business Expenses are Tax Deductible?

Did you know you can also save a bit of money with tax-deductible business expenses? You can reclaim the VAT on certain expenses, which means you won’t be missing out on any potential profit. These expenses include:

• Various supplies for the office
• Renovations to business premises
• Travel expenses
• Staff costs

Tax can be a bit of an enigma at the best of times. Getting tax codes right, submitting tax returns on time and navigating changing tax regulations in international countries all come with their own complexities. We’ve written an article explaining VAT reclaim on business expenses. You can also take a look at the typical biggest expense types to compare against your top line items.

In moments of change, having visibility of spend will enable you to see where your policies are working and pinpoint where you can do better. Automated expense software like SAP Concur solutions takes the guesswork out of knowing which claims are within policy, what is reclaimable and the appropriate rate at which you reclaim VAT for each expense type.

To find out how SAP Concur solutions can streamline your business expense process, take a look at our self-guided demo. And if you’re an existing customer check out our FAQs eBook to make sure you are getting the most out of your SAP Concur solution.