FreeAgent: Freelancers missing out on £238 million
Leading cloud-based accountancy software provider FreeAgent has found that nearly a quarter of a billion pounds go unclaimed by freelancers and microbusinesses each year because minor expenses are deemed too insignificant to reclaim.
The software provider reported that because its customer base of freelancers, contractors and very small business owners were reluctant to claim expenses worth less than £10, they were missing out on a massive £238 million each financial year.
By analysing 2.5 million expenses logged on its cloud-based software, FreeAgent found that their average customer has £216 worth of expenses with individual values of less than £10 each year.
At the same time, a survey of 100 web developers carried out on behalf of the company found that 22 per cent of micro-business owners don’t think it’s worth claiming expenses if they are below £10. Extrapolating, the software provider arrived at a cost of £238 million across the UK’s five million micro businesses.
The survey found another 14 per cent of small business owners who were reluctant to claim for expenses under £5 - suggesting that the actual cost of British business owners ignoring minor expense claims could be even higher.
Less than half (39 per cent) of those surveyed reported that they claimed back all of their business expenses while, shockingly, 5 per cent of micro business owners said they claimed back no expenses whatsoever.
Ed Molyneux, CEO 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 web designers and developers in the UK 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. 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.
“Even for a freelance business or small agency, those little expenses can end up being worth hundreds, or thousands, of pounds when they’re all combined – so it’s strange that people seem to think it’s too much hassle or not worth the effort to claim these back.”
Contact Cloud Accountant today. Call: 0808 281 030