It is important to understand all the business expenses you can claim when running a limited company. These are directly linked to the amount of tax paid and can help maximise your take home pay. Remember to keep receipts for all expenses incurred for a minimum of six years to satisfy HMRC.
Knowing what you can and can’t legitimately claim is vital. At Taxevo, we are here to help. Here are some of the typical expenses that you can claim:
You can claim the cost of business journeys you undertake in your own private car, motorcycle or bicycle. This includes travelling to and from temporary locations and between different sites. The claim is calculated at HMRC approved mileage rates.
You can claim the cost of other business travel, including rail, tube, bus, taxi and air. Fare costs to and from your home and temporary locations and between different sites can be claimed.
Parking can be claimed along with any road and bridge tolls, tunnel fares and congestion charges provided they are incurred while on business.
You can claim the reasonable cost of accommodation when working away from home. Examples of this include hotels, bed and breakfast and rented accommodation. You must meet HMRC dual purpose rules in that you are already maintaining a property elsewhere and the second accommodation is solely for the purpose of business.
You may also claim a daily incidentals allowance of £5 (£10 if working abroad) to cover the cost of laundry, newspapers, telephone calls and other incidental expenses.
When working at a temporary location you can claim the cost of food and drink. Remember to keep all receipts if you want to make a claim.
You can claim the cost of phone and broadband packages in your home or office provided the contracts are registered to your limited company. It is also possible to get a mobile phone registered in your limited company’s name as an allowable expense regardless of any personal use. If they are registered to you personally, then you can only claim the cost of identified business calls.
It is likely your permanent workplace will be your home and as such you can make a claim for using your home as your office. HMRC have a fixed rate of £4 per week to cover the general costs associated with working from home. If you are working from home regularly then it is possible to claim an increased amount. Please contact us to discuss this in more detail.
Your limited company can help pay for childcare with registered childcare providers. Basic rate tax payers can receive up to £243 per month per employee, it is up to £124 for higher rate tax payers and £97 for additional rate tax payers.
We would advise signing up with a voucher scheme provider like Edenred. There is no need to operate a salary sacrifice and dividend income is not taken into consideration when determining your rate of tax.
The cost of some training is allowable through your limited company. It needs to be associated to your current trade to be allowable. If the training is not linked to existing income, then it cannot be claimed.
A reasonable amount may be claimed for the cost of manuals and text books associated with your current business trade.
It is possible to make donations as a tax deductible expense. To qualify, donations must be made to a registered, HMRC approved, charity.
There are two types of entertaining that can be considered a business expense:
You can claim the reasonable cost of any business entertaining however, they are not tax deductible.
The cost of an annual staff event can be claimed. Up to £150 per employee per year is allowable but be aware that this cost must not be exceeded. If you do spend more then the full cost is disallowed.
You will be required to hold certain business insurances. Professional indemnity, employers liability and public liability insurance are all allowable business expenses.
It is possible for your limited company to make pension contributions on behalf of its directors and employees. We would advise speaking to a financial advisor before making any contributions.
The costs of hardware, software and other office equipment essential to your business can be claimed. Any personal use must be incidental.
There are a number of other business expenses that may be applicable. These include: eyesight tests, postage, office consumables and stationery, marketing and advertising, website design, maintenance and hosting, and some professional subscriptions.
These are just some of the business expenses you can claim. We can give you tailored advise specific to your business so please get in touch with your accountant or if you are interested in joining Taxevo please call 01962 790237 or email us today.