Top expenses to claim as a limited company
If you would like to find out more information about expenses then you may find these notes maybe helpful:
As a limited company director one of the benefits available to you is the ability to claim as an expense, costs which are solely and exclusively for your business. Expenses are exempt from tax and so could affect the amount of tax that you pay, which may in turn affect your take home salary.
To make sure that you are claiming all the expenses that you are entitled to, Easy Accountancy has put together this guide to some common expenses that you may be missing out on.
Books, journals and magazines
Magazine subscriptions, books and journals could be claimed as an expense if they are relevant to your business.
For example, if you are working in as a Chef a subscription to BBC Good Food magazine might be deemed relevant as it could be a source of inspiration and help you stay up-to-date with the latest trends and techniques.
Building a website
The cost of building a website could be claimed as a business expense. However, in order for this claim to be valid you need to expect to earn more money through the website than the website will cost to build.
Website costs can be difficult to determine and so it is a good idea to speak to your accountant to check that the cost of building a website for your business is eligible to be expensed.
The cost of entertaining your employees through events such as your company Christmas party might be eligible to be claimed as an expense if it meets the following criteria:
- It is an annual event
- The event is open to all staff members
- The cost is less that £150 per person
These days most of us spend the vast majority of our working day staring at a screen. If you use a computer at work then you may be able to claim the cost of an eye test as an expense.
However, you are only able to claim the cost of the eye test and any follow up treatment that is required such as glasses or contact lenses will not be classed as an expense.
Gifts intended for those who are not employees could be eligible to be claimed as a business expense if they meet the following criteria:
- The item cannot be vouchers, food, drink or tobacco
- The item should cost less than £50
- The item should be clearly marked with your business logo
If you are a director of your own limited company then you might be able to claim tax relief on your pension contributions as long as you are using an approved HMRC pension scheme.
As a limited company director you are probably well aware of all the travel expenses that you are entitled to claim in terms of your car and public transport costs.
However, what you may not be aware of is that you are entitled to claim a mileage allowance of 20p per mile if you choose to cycle to your business meetings.
It may also be worth taking part in a lift share if you know you are going to be onsite for a period of time, because you may be able to claim an extra 5p per mile when you have a passenger in your vehicle.
1. Advertising, marketing and PR
To run a successful business you need to make sure that your customers know about your products or services, which is where advertising, marketing and PR comes in.
This may be a one off cost or an ongoing charge and as long as the service is exclusively for your business then the cost could be classed as an expense.
If a business trip requires you to stay overnight away from your permanent address then the accommodation costs could be claimed as an expense. In situations like this you may also be able to claim for the cost of your food and drink.
3. Bank Charges
Any bank charges that you incur on your business accounts such as credit card fees and loan interest are classed as business expenses.
Childcare costs are not deemed to be directly related to the running of your business and so cannot be claimed as an expense.
As a director of a limited company you are able to claim tax relief on childcare costs in the form of childcare vouchers up to the value of £243 per month. Childcare vouchers will be paid out of your gross salary not your net salary.
In autumn 2015 the government are introducing a new scheme aimed at making it easier for parents to handle their childcare costs. For every 80p that a parent puts into the scheme the govenment will provide an extra 20p up to a maximum of £10,000 per year.
5. Home office
If you work from home you could be able to claim a proportion of your household costs and utility bills as expenses.
The cost could be claimed as a rate of £4 per week, or through working out the proportion of the overall costs that have been used for business purposes. This amount is calculated by looking at the number of rooms in your property, the number of rooms that are used for business purposes and the percentage of time that those rooms are used for work.
Pension contributions are classed as personal allowances. Many limited company owners will use a HMRC approved pension scheme, which means that they could pay less corporation tax.
7. Professional fees
The two main examples of professional fees are accountancy and legal costs. These charges could be claimed as an expense as long as they are exclusively for the running of your business.
8. Telephone bill
If your mobile phone contract is in your company name and used solely for business use then the entire bill could be claimed as a business expense.
In the case that your mobile phone is ‘pay as you go’ and used exclusively for work then you could expense all the credit amount that you top up.
If you have a personal mobile phone contract then you will be required to separate the calls and texts that are for business and for personal use. This to ensure that you only expense business related costs.
Additionally, you also may be able to claim the proportion of your home phone line rental that has been used for business calls.
If you work from home and are required to upgrade your package then this additional cost can be claimed as an expense.
9. Training courses
Training courses could be accepted as expenses if the training course in question furthers your understanding and skills in the area that you work in and is seen as being essential to your job.
Some courses may be deemed not relevant to your business, so it is always best to check with your accountant that the course you wish to study is eligible.
Whatever form of transport you use for business trips, you could claim the costs incurred as travel expenses.
If you travel by public transport then the cost of your fare may be claimed back through your company.
If you travel by car then you could claim mileage of 45p per mile for the first 10,000 miles travelled and then 25p per mile thereafter. You also may be able to claim the cost of parking your car, toll fees and congestion charges as travel expenses.
Those who travel by motorcycle could be able to claim 24p per mile and those who choose the more environmentally friendly option of cycling may claim 20p per mile.
It can be confusing to know what you can and cannot claim as an expense. Make sure that you discuss all expenses with your accountant to ensure that all of you expense claims are valid.