Guide | 2 min read

Everything you need to know about business expenses

Whether you are a sole trader or limited company, it’s important to know what type of business expenses you can claim to reduce your tax liability.

By Patrick Onofrei
Published April 23, 2022
Last updated December 03, 2022

What exactly is a business expense?

A business expense (or “tax write-off”) is an expense that you can deduct from your taxable income. You take the amount of the expense and subtract that from your taxable income. Essentially, tax write-offs allow you to pay a smaller tax bill, but the expense has to fit Revenue’s criteria of a tax deduction.

Why should I claim business expenses?

If you run your own business, then it’s useful to understand what business expenditures you can claim for as allowable expenses.

Recording your expenses allows you to:

Will I get my expenses back from Revenue?

This is a really common question, but sadly the answer is no! ‘Claiming’ expenses does make it sound like you’ll be reimbursed for what you spend – but this is not the case.

Instead, you deduct your expenses from your business income to reduce the amount of profit.

Your tax bill is worked out based on your profits, so including everything you spend money on shows your actual profit, which means you will pay less tax.

Common business expenses

Different types of business will have different types of expenditure. For example, a taxi driver will have weekly settle fees, and a plumber will have tools and material costs.

The good news is that most business expenditure is allowable, so you can claim for it on your tax return. Even expenses you have incurred personally for the business are generally allowable too.

The list might include:

Expense claims that cause confusion

Some types of expenses seem more confusing than others, so we’ll try to answer some of the most frequently asked expense questions.

1. Motor expenses

If you have a commercial vehicle, then you can normally claim the whole purchase price, as well as all the running costs.

If you have a car and it’s not solely used for business, then it’s a bit different.

2. Using your home as an office

There are a few ways to claim expenses if you use your home as an office. You can choose to claim the basic allowance, or you can apportion your household costs according to the floor area the home office takes up.

3. Training costs

You can claim training costs as an expense if it’s to top up your skills. Training to qualify for something or to gain new skills is not allowable.

However, if you have employees that are training to qualify for skills relevant to your business, then this is allowable.

4. Travel and subsistence expenses

Travel and subsistence costs, such as train fares, food, and hotel costs, are generally only allowable if you are not commuting to a permanent place of work.

This area can get complex, so please speak to your dedicated accountant for more details!

The bottom line

Expensing through your business is an essential way to minimize the amount of tax you have to pay, and good record keeping will ensure you get to keep those deductions if Revenue ever comes knocking.

Have your team of dedicated bookkeepers at Simpletax track all the expenses related to running your business to ensure you’re taking advantage of every legitimate deduction.

Still have questions?

Sometimes it’s better to talk to an expert. Book your free consultation with one of our small business experts now.