We all know that you are allowed to claim a tax deduction for any expenses which are incurred in the course of running your business. But as well as the obvious items – such as the cost of buying trading stock, labour costs, depreciation of machinery and interest on borrowings – there are other items where a tax deduction might seem unlikely but could well be allowed in certain circumstances.
Hospitality and retail businesses
If you run a shop, cafe, restaurant, club or bar, it is essential that you create the right atmosphere for your intended clientele. We’ve all been in shops or restaurants which seem a little sterile and soulless, with the effect being that we don’t linger – and possibly don’t spend as much as the management would like, right? So, all of those little touches which create the right “mood” in your retail or hospitality premises are therefore tax deductible. This could include:
- Flowers. A good flower display not only looks impressive but it can fill your premises with a floral scent which invites clients to linger and have another drink or buy more.
- Paintings. These can create a highly targeted mood which is guaranteed to appeal to your target demographic. Whether that’s modern art (to appeal to the cool and sophisticated), graffiti (to appeal to the young and edgy) or traditional (to appeal to the moneyed middle classes), artwork can be vital in giving your premises the desired look and feel.
- Online music subscriptions. When was the last time you entered a bar, restaurant or shop and there wasn’t music playing in the background? Like artwork, playing the right music is vital to appealing to your customers. A restaurant without background music can often feel awkward, with uncomfortable customers murmuring quietly away or, worse still, sitting in silence. Would you go back to such a restaurant? So, you can claim the cost of subscriptions to Apple Music, Spotify or any other service which keeps the tunes going and the mood up.
- Newspapers and magazines. Many cafes are favourite spots for customers to linger over their coffee while reading the daily newspaper. Premises that provide the reading material will often prosper over those that don’t, so you might as well claim a tax deduction for the cost of your subscriptions!
- Sofas, armchairs and coffee tables. Good furniture is often the key to creating a relaxing and welcoming environment to greet shoppers (think of the pleasure of sinking into a comfy armchair outside the changing rooms while your partner tries on some item of clothing!) so you might as well claim a tax deduction for doing it.
- Televisions. I’ve lost count of the number of times I’ve encountered a television playing quietly in the corner of a bar so why not claim for the cost of that new LCD television? Just make sure it really is for your business and it doesn’t find it’s way into your own personal living room!
- Coffee machine. What better way to welcome customers than with a cup of freshly brewed coffee out of a state-of-the-art – and tax deductible – coffee machine? This doesn’t just apply to coffee shops and cafes -if you are intent on creating a really high-end retail experience, nothing says luxury like providing drinks to customers.
In addition, you might want to think about the welfare of your staff. After all, a happy workforce is productive workforce. That could mean claiming for:
- A ping-pong table. When staff are on their break, it can aid relaxation and team building to have some form of recreation in the staff room to keep them mentally and physically sharp. This could also include buying a pinball machine, an x-box terminal, gym equipment – the sky’s the limit, provided all of these facilities are made available to your staff and aren’t reserved for you.
Mark Chapman is director of tax communications at H&R Block.