When you run a limited company it’s important to understand what expenses you are allowed to claim as tax deductible. Claiming incorrectly could land you in a whole heap of trouble with HMRC if you’re ever investigated.
In this blog we’ll discuss the most common expenses which are classed as tax allowable. Although we do strongly recommend seeking the advice of a professional like ourselves to be sure you’re always compliant. This blog can be used as a guideline.
Travel
If you need to travel for business then you can claim for your mileage, hotel accommodation, train, plane, bus and taxi fare. If parking your car, then you can claim for the parking fee. When claiming your mileage make sure that you keep a record of your destinations and the reason for travel. When having an overnight stay you can also claim for a meal and a drink.
Commuting is not classed as tax deductible, so I’m afraid going to and from the office doesn’t count. Mileage claims can be claimed for travel in a car, van or on a bike. The amount you can claim per mile depends on the type of vehicle and the amount of miles you claim per year.
When it comes to claiming for things like insurance, pool cars and hire purchase it’s best to speak to your accountant as this area can become quite complex.
Advertising
Any advertising costs which are incurred for your business are tax deductible. For example Facebook Ads, ads in newspapers, branded clothing and stationery (anything containing your logo) can be deducted.
If you instruct a professional to build a website for you this is also classed as either advertising or professional fees and therefore you can claim the cost of their fees against your tax.
Professional Fees
If you need to seek professional advice for your business, whether that be legal advice or financial advice from an accountant for example the fees are tax deductible. When hiring an accountant, think of it as an investment as they will be helping you to make sure you’re claiming for everything you’re entitled too and ensuring compliance. The added bonus is that you’re able to deduct their fees from your tax bill.
Any insurance policies you take out for the business, such as professional indemnity and public liability are allowable.
Equipment
You can claim for the cost of any office equipment and machinery purchased including office stationery. Any software which is used by the business, whether that’s paid up front or per month is a tax deductible expense.
Utilities
Business utilities such as gas, electric, wifi and phone bills can all be claimed for. All bills must be in the name of the limited company and not in the name of an individual director.
For mobile phone bills a benefit in kind charge may be applicable if employees are using them for both business and personal use.
If you rent business premises then you can claim the full amount as a business expense. If you own a property and pay a mortgage then you can only claim back the interest incurred on the mortgage.
PAYE
Any costs incurred for hiring staff such as salaries, national insurance and pension contributions etc can all be deducted from the final amount of tax you will need to pay. This is for both employees and for directors.
Employees who wear glasses for VDU use are allowed to claim for the cost of eye tests.
Self development and training
Providing any training course you decide to go on are relevant to your line of work then these expenses can be claimed against your tax bill, this includes any training necessary for employees along with books and other relevant learning materials.
Bad Debt
If you have issues with recovering bad debt then providing you can show that you’ve taken all necessary action to get it back then you can claim the cost of the outstanding invoice if it’s over 6 months old.
If bad debt is an issue for your business then we can help with your credit control process to ensure more clients pay you on time everytime.
Trivial Benefits
Are you aware that you can treat your employees to gifts up to the value of £50? You can even treat yourself if you’re on the payroll! You are entitled to spend up to £300 per tax year per director and there is no cap limit for employees on the payroll. However each gift must be £50 or less otherwise it’s not allowable.
I’m sure it goes without saying that all receipts and invoices must be kept in order to claim back the expense. Anything without proof of payment will need to be dismissed from your expense claim. This is why it’s so vital to have the right software to capture your expenses.
If you’re not sure whether everything you’re claiming for is correct or you’re worried you’re missing out on vital expenses, such as trivial benefits for example then download our free resource here:
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