If you run a limited company, there are a variety of different business expenses you may incur. However there are various rules & some common errors you should avoid when it comes to claiming these expenses back.
When it comes to expense claims you should bear the following in mind:
- You can only reclaim expenses that are ‘wholly, exclusively & necessarily’ incurred in the course of carrying out your contract duties
- If your expenses have a ‘duality of purpose’ then you can’t reclaim them e.g. if the expenses have a joint personal & business use
- You should always keep paperwork and receipts safe, as you may need these to prove claims in the future
- Most of the time, expenses can be offset against your companies corporation tax liability (however there are some exceptions to this so do your research)
Some examples of typical limited company expenses are; company employee salaries, National Insurance Contributions for employees, contributions to pension schemes, costs of company stationery, technical equipment costs, bank account charges, training course costs, business insurance, subscriptions & periodicals relating to your contract work, subscriptions to professional organisations, travel expense costs, subsistence costs, telephone/mobile/broadband costs, parking expenses, fuel expenses, allowances for running a home office, accountancy fees, medical costs, solicitor fees, company administration costs, advertising & marketing costs, annual company event costs, costs of entertaining clients, business gifts to clients (worth up to £50 per recipient).
There are lots of other little details to remember including the fact that if your contract work falls within the scope of the IR35 rules, you can claim a fixed allowance. You should also be able to reclaim any expenses you paid for personally before your company was incorporated. It’s also important to remember things like the ‘benefit in kind’ tax rule, etc.
The rules surrounding tax expenses are complex & confusing – so let us help.
Call us today on 0141 345 2335 for further information.