Limited Company Expenses Guide – Maximise take home pay and reduce your tax bill

It is vital to understand what expenses can be claimed through your Limited Company in order to reduce your tax bill and keep more of your hard earned cash. Understanding those genuine expenses and those that are pushing your luck is important.

We have put together a list of the typical things that can be claimed, although we are here to guide you on this and will be happy to answer any questions you may have.

Just remember to keep all receipts for any expenses you incur.

Travel

Use of a private car

You can keep a mileage log to record your business journeys in a private car, motorbike or bicycle. If you use accounting software then you should be able to do this there. The claim is calculated at the current HMRC approved rate.

Other Travel

You may use other means of travel and these costs can be included. Some examples are:

• Air fares
• Train
• Bus
• Tube
• Taxis
• Congestion charges
• Parking
• Tolls

Remember, travel expenses can only be claimed when travelling to a client or temporary workplace. It does not cover travel from home to your permanent workplace. If you expect to work at a location for more than two years then you cannot claim travel expenses. Please contact us for more detailed advice if you think this may apply to you.

Accommodation

If you need to work away from home then you can claim the reasonable cost of temporary accommodation. This can include hotels, B&B, rental accommodation but you must continue to have a permanent residence elsewhere.

You can also claim a daily incidentals allowance of £5 (£10 if working abroad) to cover the cost of laundry, newspapers, telephone calls etc.

Food and drink

If you are working at a temporary location then you can claim the costs of meals. HMRC set benchmark scale rates at which no tax or National Insurance is due and they depend on the amount if time spent travelling and working.

• If you are away from your home or regular workplace for at least 5 hours, you can claim up to £5 on a meal
• If you are away from your home or regular workplace for at least 10 hours, you can claim up to £10 for two meals

If you leave home before 6AM, you may also claim £5 towards breakfast, but only if this is unusually early for you.

If you work past 8PM, you may also claim £15 towards dinner, but only if this is unusually late for you.

Like all other expenses claimed, HMRC will require a receipt so please make sure you keep all receipts.

Use of home as an office

If your permanent workplace is your home address you can claim an allowance for working from home. The amount you can claim will depend on how much you work from home. Our recommendation is the HMRC allowance of £6 per week. If you work from home for more than 50 hours per month get in touch as you may be able to claim more.

Accountancy fees

Any accountancy fees you pay are an allowable expense.

Mobile phone

If your mobile phone is a personal one, then you can only claim the cost of identified business calls. A contract in the company name means you can claim the full cost even if there is personal use.

Internet

If you require internet, then this can be claimed if the contract is in the company name and is a requirement for the business.

Training

Any cost of updating an existing skill is allowable, but you cannot pay for training in a completely new skill.

Charitable donations

You can make donation to a registered charity, but it must not put the Company in a loss position.

Business entertaining

The cost of entertaining clients is allowable through the company, although you do not get tax relief on the amount spent.

Staff entertaining

An annual event up to the cost of £150 per employee plus £150 for directors is allowable. This can be for a Christmas party or summer BBQ. A word of warning here, if the cost exceeds £150 per head then the whole cost becomes disallowable.

Professional Indemnity, Employers Liability and Public Liability Insurance

By law all employers must have Employers Liability insurance, and there may be other insurances that you require. These are all allowable costs.

Pensions

Pensions are a great way to save some tax on your Company profits. Any contributions made to directors or employees are allowable. There are personal implications of making pension contributions, so we advise speaking to a Financial Advisor – we would be happy to put you in touch with our trusted partner.

Computer equipment

Computer equipment is vital for most businesses. Any equipment you buy for use in the business is allowable, provided there is only incidental personal use.

Other expenses

There are many other expenses that can be claimed and each business is different. Some others to consider are:

• Marketing and advertising expenses
• Website design, maintenance and hosting
• Sub-contractor costs
• Books, journals and magazines related to your trade
• Postage and stationery
• Printing
• Computer software
• Certain professional subscriptions

How Taxevo can help

Understanding what you can and can’t claim as an expense can ultimately mean more money in your pocket at the end of the day, so how can you be sure to get it 100% right? Our Taxevo clients enjoy unlimited advice and support from their Taxevo accountant, so they’re able to check whether an expense is allowable before they part with their cash. If this sounds like the type of advice and support you need, get in touch today.