By PaperRocket Accounting, Feb 16 2018 12:52PM
As a personal service company, there are a number of standard expenses that you are likely to be putting through your company. The most common are:
- Travel (whether this is for public or private transport)
- The rent, heating and lighting of an office used by your company
- Any office items, such as stationary, printing cartridges, computers and software
- Business phone bills
- Accountancy fees
Each of these will help to reduce your corporation tax bill at the end of the year.
However, there are some other items that you may have purchased personally and wondered “should I be putting this through my company?”. So, let’s take a look at some of the more unusual expenses you may come across, and whether you can put them through your company as a tax deductible expense?
• A new suit for an important business meeting- not allowed. The golden rule with any business expense is that it has to be wholly, exclusively and necessarily for the purpose of the business. Unfortunately, a suit, or any clothes that you could feasibly wear outside of a work environment (regardless of whether you actually do or not) just aren’t deemed to be exclusively for business use.
So, are any type of clothes allowed through your business? That leads us on to…
• Protective clothing, uniforms or costumes- allowed. These are items that would be seen to be necessary for you to be able to perform your job safely and appropriately, so for example, a high vis jacket, helmet, nurses uniform or clown costume! Any such item would be seen as an allowable expense and therefore fine to put through your company.
A slightly grey area is clothing with a company logo, but as long as the logo is permanent and conspicuous, this should be fine as it would also count as a form of advertising.
• Annual eye test- allowable. If you regularly use a computer in your line of work, then you are fine to put the cost through your company.
So, what if the eye test determines you need glasses?
• Spectacles- generally, not allowable. On the whole, you wouldn’t be able to put this cost through your company as usually these would not be exclusively for business use but instead would also be worn outside of your working environment. If, however, you are able to obtain a prescription that states that they are solely for business use and you can prove that they are not worn elsewhere, then the expense would become allowable- provided it is a reasonable amount (i.e. not purchasing top of the range designer frames).
• Inviting (and funding) your employees’ spouses to a summer BBQ- allowable. Provided certain criteria is met (such as not spending more than £150/head/year, and ensuring that all employees are invited), then you are more than welcome to invite employees’ plus ones to your company shindigs, and that cost will be treated as a business expense. See 'How to fund a staff summer party'
If there are any expenses that you come across that you are not sure if they are allowable or not, always ask your accountant before putting them through your company- or you may get a nasty surprise when they are all disallowed at the end of your company year!
PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.
We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.
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We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.
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