By PaperRocket Accounting, Oct 16 2018 01:10PM
One of the great things about having your own business is the ability to be able to put a number of company expenses through your business books. This not only means that those expenses aren’t coming out of your personal pocket, but also will help to reduce your corporation tax.
The Golden Rule
When it comes to deciding whether or not you can go ahead and claim an expense through your company, it is vital that you always remember the golden rule- that an expense can be claimed only if it is wholly, exclusively and necessarily for the purpose of the business. This means that if an expense is both necessary for the running of your business, and is solely going to be used by the business (i.e. not used personally as well), then it is an allowable expense.
The most common expenses that can be claimed
The types of expenditure you can claim for through your limited company is largely dependent on the type of sector you are working in, builders for example are likely to have far more varied expenditure than say a management consultant who mainly works behind a desk all day. Below, we have listed the most common business expenses for a service company (such as an IT contractor).
• Travel to and from your temporary place of work (if you are there for less than 24 months)
• Travel to meet clients for business meetings
• Mileage claims of 45 pence per mile for the first 10,000 miles of the year (25 pence thereafter)
• Company insurances such as professional indemnity insurance
• Hotel stays and subsistence for overnight business travel
• Telephone and broadband costs
• Stationery and postage
• Computer equipment such as laptops, printers, software licences
• Professional subscriptions such as IPSE membership
• An allowance for using your home as your office
• Childcare vouchers
• Accountancy fees and legal costs
• Entertaining clients (n.b. this expense can be put through the company but will not receive corporation tax relief)
• Entertaining staff (check with your accountant for details on this allowance)
• Paying into a personal pension
• Training courses and seminars
• We have also covered some of the more unusual expenses that can (and cannot) be claimed in this previous blog
This is not an exhaustive list by far but is a general guide most contractors can use. If you are unsure if you can claim specific items through your limited company it is always best to run these past your accountant who will be able to give specific advice.
PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.
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