How To…Claim Expenses as a Contractor

When you are a Professional Contractor or Self-Employed, you can claim expenses to reduce your tax liability. Staying on top of your expenses is critical for maintaining financial health and ensuring you’re optimising your profitability. Managing your expenses can sometimes feel like a never-ending task without the right process in place to help. Here’s how you can stop those receipts from piling up and make expense tracking simple!  

1. Keep Updated Records of Your Tax Deductible Expenses 

One of the most straightforward yet effective habits you can develop is documenting your expenses as soon as they occur. Whether it’s a quick coffee with a client, travel costs, or new office supplies, every expense should be recorded immediately. This not only helps you stay organised but also ensures you can claim every allowable business expense contractors in a personal limited company or umbrella company are entitled to, keeping you prepared for when tax season rolls around. By staying on top of your expense record-keeping, you’ll also be better prepared to handle any audits or financial reviews with ease. To make the most of your expense claims, it’s essential to keep detailed and accurate records, includes…  

Receipts and Invoices – Always keep copies of receipts and invoices for your expenses. Digital copies are acceptable.  

Mileage Logs – If you’re claiming for mileage, a detailed log of your journeys is necessary.  

Bank Statements – Keeping track of your business spending through bank statements can help when it comes to tax time.  

2. Use An Expense Tracker

In the digital age, there’s no need to drown in a sea of paper receipts. There are many handy expense-tracking apps and tools designed to simplify the process. With our own expense tracking app, for example, you never have to keep a receipt again; simply snap a photo and record the expense directly in the expense app, making it easier than ever to manage your finances on the go without the excessive paper backlog.   

3. Know what you can claim as expenses when self-employed

The general rule of thumb is that if you need to spend money to complete your contract work, and that purchase isn’t one which you would normally make in everyday life, then the expense is an allowable one and you can claim tax relief on it. But what exactly qualifies as a business expense for contractors? Here’s a breakdown of some common categories for claimable business expenses…

• Equipment Expenses 
  Any tools, equipment, or supplies that you need to perform your contract work are legitimate business expenses, these can include…
  Laptops, Tablets, and Phones – If you use these devices for work they can be claimed as business costs. However, if you use these devices for both personal and business purposes, you can only claim a portion of the cost.
  Software and Subscriptions – Any software or online subscriptions necessary for your work, like CRM or project management software, can be deductible if they are necessary for your role.
• Home Office Expenses
  If you work from home, you may be able to claim a portion of your home expenses, these can include…
  Utilities – A portion of your electricity, heating, and internet costs can be claimed.
  Office Furniture – Desks, chairs, and other office furniture are claimable if they are necessary for your work.
  E-Workers Allowance – There is a daily tax relief for remote workers called e-workers allowance of €3.20 a day. Over an average working year this could generate a tax saving of up to €400!
  
• Professional Fees and Subscriptions
  Membership of professional bodies, as well as fees for training or courses that are relevant to your work, can be claimed as expenses.
  This also includes accountancy fees, fees for accounting services are a legitimate business expense.
• Marketing and Advertising Expenses
  Expenses related to marketing your business, such as website costs, advertising, and promotional materials, are fully deductible. This also includes…
  Networking Events – Costs associated with attending networking events to promote your business can be claimed.
  Business Cards and Flyers – These are considered marketing expenses and can be deductible.
• Training and Development
  Investing in your skills and knowledge is essential for staying competitive.
  Courses, workshops, or conferences that enhance your abilities related to your contracting work can be deductible, once the topics are relevant to your contract role.
• Relocating Expenses
  If you are relocating to or within Ireland for a contract role you may be entitled to relocation expenses. If you’re relocating for a longer-term contract (6+ months) and the relocation distance is deemed ‘non-commutable’ (100+ KM) you may be entitled to tax relief on some or all of the costs associated with your move, take a look at our handy relocation expenses guide. 
• Miscellaneous Expenses
  Other expenses that don’t neatly fit into the categories above but are necessary for your business can also be claimed, including…
  Postage and Printing –  Such as costs for sending invoices, contracts, or printing documents.
  Bank Charges – Fees for your business bank account or payment processing charges.
  Client Entertainment – Such as lunches, dinners, or small gifts for clients can be claimed when in a Personal Limited Company, but if you are in an Umbrella Company these expenses can often be claimable on a case by case basis. 

4. Know What Expenses Are Not Tax Deductible

While it’s tempting to claim as many expenses as possible, it’s important to be aware of what doesn’t qualify such as… 

Personal Expenses: Any expense that isn’t directly related to your business.  

Commuting Costs: Daily travel to and from your usual place of work isn’t deductible.  

What claimable business expenses you can avail of can depend on your role or business, so it is always important to get 1:1 guidance from a professional accountant and tax specialist. If you have any queries, contact us on (01) 611 0707, or book a call to talk to a consultant who will find the best accountancy and tax solution for your contracting career, whether you are new to contracting or have been contracting long-term. 

5. Review Regularly 

It’s not enough to just record your expenses; regular reviews are key to effective financial management. Set aside time weekly or monthly to go through your tax deductible contractor expenses, ensuring everything is in order and that you haven’t missed anything. This is also an excellent opportunity to identify spending patterns and areas where you might be able to cut costs. Regular reviews can highlight trends that could lead to better budgeting and financial planning, helping you to optimise your profitability further.  

Why Expense Management Matters  

Expense management isn’t just about staying organised; it’s about ensuring you’re maximising your potential tax deductions and maintaining control over your financial future. By implementing these practices, you’ll have a clear understanding of where your money is going and how it’s impacting your bottom line. This level of control can help you make more informed business decisions, reduce unnecessary spending, and ultimately improve your profitability.  

If you have any queries, contact us on (01) 611 0707, or book a call to talk to a solutions consultant who will find the best accountancy and tax solution for you.