What Expenses Can I Claim For A Limited Company?
[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Sub Heading” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Here is a list of the more common business expenses when asking “What Expenses Can I Claim For A Limited Company?”
[/et_pb_text][et_pb_text admin_label=”Travel Expenses” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Travel Expenses and Subsistence Expenses
Generally, you can claim expenses incurred for all legitimate business journeys including travel to a temporary place of work. A temporary workplace is defined where you go to perform a task for a limited period of time or for a temporary purpose. A temporary place of work ceases to be temporary if it is attended for a period longer than 24 months or is likely to last more than 24 months. This means as soon as you become aware that it will last longer than 24 months, it is no longer temporary.
(As an employee in a permanent job you cannot claim travel to your place of work. This would be regarded as ordinary commuting.
It may be obvious but we thought we would just confirm it to be the case.)
Examples of allowable Travel Expenses and Subsistence Expenses:
- Air, train, bus, ferry and taxi fares.
- Parking, congestion charges and tolls.
- Meals whilst travelling or at temporary workplace.
- Hotel accommodation and meals when you need to stay away from home.
- Incidental expenses when staying away overnight: £5 in UK, £10 abroad.
- Business mileage when using your own private vehicle – at prescribed HMRC rates.
|
Vehicle |
Rate per mile for first 10,000 miles | Rate per mile for miles in excess of 10,000 |
| Car / Van |
45p |
25p |
| Motorcycle |
24p |
24p |
| Bicycle |
20p |
20p |
HMRC Business Mileage Rates (employee’s own private vehicle):
Claiming fuel used in a company vehicle is considerably less!
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Business Entertaining” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Business Entertaining
Generally entertaining is not an allowable expense by HMRC. When compiling year-end financial accounts, your accountant will remove entertaining expenses prior to the corporation tax calculation.
Only entertaining expenses that meet all of the following three criteria maybe claimed:
- Customers or potential customers are present.
- No member of the employee’s or director’s family is present, and
- Where the purpose of the event is not social e.g. reciprocal entertaining.
The cost of entertaining staff or colleagues in the same organisation is not considered allowable entertaining. e.g. taking a colleague to lunch.
To ensure entertaining is allowable it should be documented with the original receipts.
If you are VAT registered you cannot claim VAT on business entertaining expenses.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Staff Entertaining” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Staff Entertaining, Benefits & Gifts
Employees provided with benefits in kind such as cars, vans, loans (over £10,000) or healthcare are deemed to have received a taxable benefit. These benefits need to be declared to HMRC by submitting annual P11Ds. Employee tax codes are then amended to collect more tax from the employee. Please speak to your accountant if you provide any employees or Directors with these type of benefits.
VAT can be claimed on staff entertaining.
HMRC allows ‘trivial benefits’, generally under £20 each. Examples of these are:
- Work place canteen. Tea, coffee and snacks only if they are available to all employees.
- Small Gifts. E.g. flowers. As long as these are given in recognition of a particular event and is not part of any reward for services.
- Seasonal gifts e.g. a turkey, bottle of wine or box of chocolates.
HMRC allows up to £150 per employee for an annual event such as a summer outing or Christmas party. All employees must be invited to attend. It is only one event so you cannot have, for example, two events at £75 a head. Please note these rules are not the same for a company with just directors.
For staff entertaining that falls outside the above areas, employers may pay tax for employees that falls due on staff entertaining. An employer can apply for a PAYE Settlement Agreement (PSA) to settle tax in these circumstances. Examples when this may be applicable are:
- Company department ‘nights out’ e.g. bowling, meals, go-cart racing.
- Employee hampers.
Please note – Cash payments must always go through PAYE.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Telephone / Internet” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Telephones and Internet
Home Telephones – You can only claim the cost of business calls. You cannot claim the cost of the line rental because you would have paid this anyway. If you want to claim rental you should install a second line in the company’s name which the company must pay.
Mobile Phones – If the account is in the company’s name and the company pays the bill then it is allowable. If the account is a personal one then you can only claim the cost of the business calls.
Internet – This can be claimed if it is in the company’s name and private use is minimal. If the account is personal you may only claim a proportion of the cost that is related to business use.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Subscriptions / Memberships” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Professional Subscriptions and Memberships
Claims for subscriptions to professional bodies relevant to your employment are permitted. Check with HMRC to see whether your body is allowable. Subscriptions where the activities are not directly relevant to your employment are specifically disallowed.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Use Of Your Own Home” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Use of Your Own Home
HMRC recognises that more and more employees work from home in recent years, so a small amount maybe be claimed for minor home use.
If you leave your home each day to work at a client’s site, HMRC allows you to claim up to £4 a week or £18 a month. If your claim is greater than £4 a week then this could trigger an investigation by HMRC. Therefore, unless your cost is significantly more than £4 a week, it is probably best not to make a claim.
If your costs are significant, you must actually work at home on revenue generating activities. The office that you use must actually be a dedicated office for your work. The office must be available for inspection by HMRC and they may wish to hold a meeting in it.
The costs should also represent the cost of providing an office at home i.e. a proportion of heating, lighting, council tax and other direct property related costs. For example, if you have a house with 8 rooms, you could charge 1/8 of your costs.
You should also reduce the cost by the amount of private time spent in your home office. A simple formula to use is to multiply the cost by the fraction of daily hours spent in the office, which is typically 8 hours e.g. 8/24. This will avoid your office being subject to Capital Gains Tax should you sell your house.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”General Office Purchases” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
General Office Purchases
The cost of postage, stationery and computer consumables are all allowable.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Training” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Training
You can claim the cost of training courses as long as they are relevant to your employment.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Equipment Purchases” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Equipment Purchases
The cost of equipment purchased to carry out the duties of your employment are allowable.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Reference Books / Journals” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Reference Books and Journals
These are allowable as long as they relate to the duties of your employment.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Eye Tests” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
Eye Tests
The cost of an initial eyesight test, if it is necessary for the initial or continued use of visual display equipment in your duties, is allowable. The cost of spectacles is not an allowable cost.
[/et_pb_text][et_pb_divider admin_label=”Divider” color=”#692822″ show_divider=”on” divider_style=”solid” divider_position=”center” hide_on_mobile=”on” height=”5″] [/et_pb_divider][et_pb_text admin_label=”Disallowable Expenses” background_layout=”light” text_orientation=”left” use_border_color=”on” border_color=”#692822″ border_style=”solid” background_color=”#eeeeee” custom_padding=”15px|15px|15px|15px”]
Disallowable Expenses
Expenses that are not allowed include:
- Office clothing – i.e. business suits (except safety clothing).
- Spectacles or Contact Lenses.
- Car servicing and repairs for your own vehicle.
- A Training Course not related to your employment. For example, a web designer claiming for flying lessons.
- Personal or Private Club Memberships – gym or golf club memberships.
- Items mainly for personal use e.g. Televisions, Sat-Nav.
[/et_pb_text][et_pb_cta admin_label=”Call To Action” title=”Still unsure about which business expenses to claim? ” button_url=”http://mazelimited.co.uk/contact-maze-accountants-banstead” url_new_window=”off” button_text=”Contact Maze Accountants” use_background_color=”on” background_color=”#692822″ background_layout=”dark” text_orientation=”center” use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”off” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″]
Please contact Maze Accountants on 020 8643 9633 if you require further clarification about any other business expenses and costs.
[/et_pb_cta][/et_pb_column][/et_pb_row][/et_pb_section]