Claiming expenses is one of the upsides to a tax return. You can get some of that money going back into your business. The baffling part is knowing what you can claim for.
You can’t claim for things that you haven’t actually used, or things that you’ve bought for personal use (or have dual purpose). There are some exceptions, which are outlined below.
Limited companies can claim tax relief for the costs of an accountant preparing accounts for the company. Phew!
Advertising and marketing
This one is a bit more technical. You might consider lunch out with a client to be a form of advertising and marketing, whilst HMRC consider it as entertainment. If it is considered entertaining you cannot claim tax relief. For other forms of advertising and marketing, you are able to claim tax relief.
Broadband and phone
As long as the contract is in the company name you can claim tax relief on broadband and phone costs. If the contract is residential and you cannot prove a clear split in the service between personal and business use, you will be unable to claim. Likewise, if significant personal use is proven on a business contract, you may be liable to benefit in kind charges.
Business insurance such as; public liability, employers liability, legal expenses, tax investigation and professional indemnity insurance are claimable expense and do not attract a benefit in kind charge.
If you’re entertaining employees, you may be able to claim tax relief. For the event to qualify as not being a taxable benefit it must be an annual event (like a Christmas party), open to all staff, and cost less than £150 per guest present. If the event doesn’t meet all of these criteria, it’s a taxable benefit
Computer equipment/ electronics
You can claim for computer equipment as long as you use it solely for the business.
Directors and employees of the company can claim for the cost of one private health assessment or health screening each year with no benefit in kind charge.
Business can also claim for overseas medical costs if an individual needs medical attention while on a business trip. The costs must be charged directly to the company and the arrangements made in advance.
If you require treatment for a disease or injury that was sustained through work, this is also tax-deductible. For example, if employees consistently work on a computer you can claim for the cost of an eye test. However, the cost of the prescription glasses or contact lenses is not allowable, and the employee must pay for these themselves.
If your limited company has a commercial vehicle, you can claim all costs of the vehicle, including; road tax, insurance, fuel, vehicle lease, washing and repairs. You can alternatively record business mileage and claim a set amount per mile travelled.
If your vehicle has dual purpose (personal and business use) the best way to claim is by buying the car from personal funds and claiming per mile travelled for business. This avoids benefit in kind which would mean owing HMRC personal tax.
If you pay for business premises for your limited company you are able to claim the rent as business expenditure. If you’re using a home office you can also claim expenditure. See the full list of details from HMRC here.
Repairs and renewals
General repairs for the business and small renewals are not capital expenditure according to HMRC rules.
You can claim for wages, benefits and pensions as well as other costs you may incur from having employees.
Stationary, postage and printers
The costs that you can include; running a fax machine, mobile phone, the internet and a landline. These, however, don’t include the cost of purchasing the equipment.
Not to worry though, you can still claim your post-its and stamps – along with other stationery and postage costs (as long as they’re just for the business).
You can claim if you need a mobile phone for your business. The contract must be in the name of the business, and you can only claim tax on the first handset you provide to each employee. If an employee has more than one handset, the extra mobile phone will be taxed as a benefit in kind.
You must also pay for the mobile phone straight out of the company account. This exemption applies to the cost of the actual handset, line rental and (if applicable) and calls.
If the business requires a subscription to a professional body, you can cover these costs without paying extra tax or National Insurance. The only subscriptions that you can claim for are shown in HMRC’s approved subscription index.
The subscription must come directly from the business bank account (rather than from an employee’s account) otherwise it will be subject to PAYE and employee’s National Insurance as it would be considered part of the employee’s salary.
If employees require training for their position, these expenses can be claimed by the company. The training must be paid for directly from the company account and the skills are relevant to the business.
Travel and accommodation
If you have to travel for work, the costs of your travel and accommodation may be claimable. These expenses are subject to the 24 month rule.
The 24 month rule states that if the employee has spent, or is likely to spend, 40% of their time at that location within a 24 month period, it is no longer a temporary workplace.
If your line of work requires that you provide employees with specific work clothing, you can claim for this. Typically this is only for protective clothing such as safety boots and helmets.