Allowable expenses

So what expenses can I claim through my Limited Company?

A phrase you will hear a lot of ‘if its wholly and exclusively for business use’ then you can claim the cost through the company. So use your common sense, you will know if its a personal cost or whether it’s a legitimate business expense.

So here is a list of allowable expenses, however don’t rule anything out. Talk to your accountant if you are uncertain.

  • Accommodation & Subsistence
  • Accountancy
  • Advertising
  • Bank Charges and Interest Payable
  • Business Entertainment
  • Childcare vouchers
  • Computer Hardware and Office Equipment
  • Direct Sales costs
  • Internet and Telephone
  • Marketing
  • Motor Expenses/Mileage Claims
  • Other Computer Costs - Software
  • Pensions
  • Printing, Postage and Stationery
  • Professional and Public liability Insurance
  • Subscriptions, Books and Journals
  • Sundries
  • Training
  • Travelling
  • Use of Home
  • Website costs

Can I claim lunches through my Limited Company?

If you travel to your principal place of work more than 40% of the contract then the answer is no. You will only be able to claim for lunches if you travel to different destinations, so please bear this in mind.

What if I do claim lunches and HMRC investigate me?

The cost of the lunches will be classed as a benefit in kind and therefore you will be effectively taxed in the same manner as a salary.

Can I claim my suits/clothing?

Unless you have put your company logo on that suit, no you cannot. HMRC’s stance is, if you can wear it outside of work in normal day to day life, its not allowable.

Some of my bills are in my personal name, do I have to change them over to the company’s name?

If you want to claim the vat back on those expenses, then yes you will need your company name on the invoices. However this is irrelevant if you are on the flat rate scheme of vat, so you can easily claim the business use of that cost through the company without changing names on the invoice.

Do I really need insurance?

We all have insurance on the ‘Cloud’, what standalone company doesn’t? The majority of contracts now state all their suppliers must have their own insurances, so the choice may be taken out of your hands.

Use of home, what amount should I be claiming?

The stipulated minimum from HMRC is a whopping £3 per week. The £3 comes from an Act in 2003 (need we say more) where an employer can pay an employee £3 pw for the extra costs of working at home without tax implications and without the need for any proof of those additional costs. 

As a director, you can of course claim more than this but should then have proper calculations/bills to back it up (to calculate accurately, add up total household bills - electricity, gas, council tax, service charges, cleaning, and rent (exclude mortgage payments!) - and divide by the number of rooms in the house (if you use a dedicated room for business purposes - if used 50% for business purposes, half the room cost, and so on). You will need to exclude bathrooms, WCs and entrance halls from the total rooms. Gasp for air .....and then apportion it for the number of days worked from home.

NB It is not an expense of the Director of the Company; it is rather a rental by the owner/occupier of premises to another legal entity i.e. the Company for being allowed to use the actual space on the premises to house the Company assets and records and where to work on at least the administrative side of running that Company.  If this space was not available to the Company you would point out to HMRC that you would need to use serviced offices or rent your own business premises probably at a much higher cost.

NB – Ignore anyone talking about exemptions or allowances, they really do not exist in 2011, you must only claim for expenses you have actually paid for.

Also ignore the ‘bloke down the pub’ just because he is claiming something through his business, it doesn’t mean you can!

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