In a survey carried out by YouGov for FreeAgent – who provide the UK’s market-leading cloud accounting system for freelancers and micro businesses – just one in five of micro-business owners said that they claimed back all of the expenses they incurred for their business. The poll, which surveyed more than 500 micro-business owners/sole traders and was carried out to mark the launch of FreeAgent’s £1m crowdfunding drive through Seedrs, revealed that 21 per cent of respondents said they claim less than half of their small business expenses, with 10 per cent admitting they claimed “hardly any” or none of their expenses. In addition, a quarter of micro-business owners surveyed said they would not bother to claim an expense if it cost them up to £5, while a further 19 per cent said they would not claim anything worth up to £10. This can significantly add up given that in 2014, FreeAgent logged a total of 2.1 million expenses worth a combined total of £146 million.The research also revealed that the main reason micro-business owners haven’t claimed back an expense is that they don’t think they’re worth claiming – with 37 per cent of respondents admitting this. Other reasons for not claiming expenses included losing or forgetting the receipts, not wanting to face the admin involved and worrying that HMRC will challenge them. Ed Molyneux, CEO and co-founder of FreeAgent, said: “In order to avoid overpaying tax, all small business owners should be scrupulous about reclaiming their expenses. But it’s surprising how few people actually do claim everything back, and how many ignore or 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. Before too long, those little expenses can be worth hundreds of pounds, so it’s strange that people seem to think it’s too much hassle or not worth the effort to claim these back.”Internal research carried out by FreeAgent also suggests that technology may help people stay on top of expenses – and so claim more of them. In a review of data from its 40,000+ customers, the company found that 61 per cent of its UK customers recorded an expense worth less than £10 in 2014. The stats also showed that more than a third of the total number of expenses logged in FreeAgent during 2014 were for amounts less than £10. Ed continues: “Although the YouGov research paints a stark picture, the good news is that when people are using technology like FreeAgent, which makes it quicker and easier to log expenses, it looks like they’re actually more likely to claim these smaller costs back. Almost two thirds of our UKcustomers recorded an expense worth less than £10 last year, so either we’re really good at attracting a particularly frugal customer base or we’re helping businesses realise the value of recording these receipts.”FreeAgent believes that the results demonstrate the need for its multi award-winning cloud accounting system among the UK micro-business sector – and the value of the business to investors interested in its crowdfunding drive. More information about FreeAgent’s crowdfunding campaign can be found here: https://www.seedrs.com/
UK small businesses at risk from ignoring their expenses
