Limited company expenses. What can I legitimately claim?

Choosing to set-up a limited company, as opposed to becoming part of an umbrella company or doing business a sole trader can be a good decision for many reasons. In all these instances there are expenses you can claim but here we’re looking specifically at your expenses if you are trading as a limited company.

Defining Expenses

In business terms an expense is a cost incurred or money spent by your business that is tax deductible and therefore reduces taxable income. During the course of your work as the director of a limited company you will incur expenses, which vary extensively from p&p costs to purchasing office equipment.

The golden rule for all limited company expenses claims is honesty. Only genuine company expense claims are allowable and therefore you should only try and claim for expenses which have been incurred wholly, exclusively and necessarily for the running of your limited company. It is also possible to claim for limited company expenses which are considered dual purpose, meaning you can claim for a percentage of an expense which may be used for business and personal purposes. For example, you might purchase a laptop for £500 and use it 50% of the time for business purposes. In this instance you could claim £250 of the laptop as an expense; the proportion of the product that is for personal use cannot be claimed.

It is essential you keep all of your receipts and invoices so you can prove that any claims you submit are legitimate.

At Futurelink Group we provide a limited company solution, which ensures all your expenses are legitimately claimed and everything is carried out legally in compliance with the HMRC. To find out more information about our solutions, contact our friendly customer care team on 01923 277 900 and they will be happy to help.

Key Limited Company Expenses

Below are some of the key limited company expenses you and your accountant may need to consider.

Home Office

If you work from home, you’ll be able to gain tax relief from the additional household expenses that you will incur. In most instances, such expenses will include:

  • Gas and electricity to heat and light your work area
  • Business telephone calls

You can’t claim for expenses that are due regardless of you working from home i.e. your mortgage and council tax payments.

As of April 2012, you only need to provide evidence of household expenses that you wish to claim for if they exceed £4 per week.

Phone Bill

Your business mobile phone, whatever the cost or model can be claimed back as an expense from your business account, provided it was purchased through the company and is used for company purposes. The cost of your monthly contract can be claimed back as well as additional costs outside of the tariff. You will not be able to claim the cost of a second business phone as it is considered an asset. You will also not be able to claim for any phone or contract which isn’t held in your business’ name.

Broadband

Much like your phone, your business broadband is exempt from tax as long as the contract is held in the name of your company and paid for from your business bank account. The full cost of your broadband is tax deductible, but if you do use it for both business and personal purposes you will be able to claim up to 75% of the whole bill.

Company Insurance

If your limited company is a single person business you are not necessarily required to have insurance but it’s definitely worth considering. Insurance options such as professional indemnity, employer’s liability and public liability can all be offset against your Corporate Tax. The full amount you pay in insurance can be claimed back through your limited company, unless the insurance in question is for your personal benefit, such as private medical insurance.

Company Training

There are some industries in which training is necessary and can truly enhance the success of your business. Training costs can be claimed back in some instances, highly dependent upon your specific profession and the level of your qualification. The training has to relate directly to your profession and the payment for the training must be in the name of the business and not you as an individual.

Pension Contributions

Becoming the director of a limited company means any company pension you have has to be arranged by you and your accountant. A portion of your income can be paid into a pension scheme and this can help you save a large percentage of your corporation tax. You can put up to £50,000 a year into your pension.

Computer Equipment

Purchasing computer equipment through your company means you are essentially loaning it from your company for work purposes, as well as the software on any of these computers. You can claim up to a maximum of £1000 in computer equipment, as it becomes a capital item rather than a regular expense once it surpasses this volume.

Travel

Travel expenses are amongst the most important for many limited company contractors. You may find yourself travelling from contract to contract and if you use your own personal vehicle for business journeys you can claim a particular expense based on mileage but not for insurance, car tax or petrol.

You can claim 45p per first 10,000 miles in a tax year (13/14 guidelines) and then 25p after 10,000 miles in a tax ear (13/14 guideline). It is also possible to claim back expenses when using public transport with receipts. Contractors can’t claim back mileage on company cars.

Other Expenses

There are many other limited company expenses that you can claim, these include:

  • Employers’ National Insurance Contributions payable on salaries of company employees
  • Accommodation costs when away from place of business
  • Stationery, postage and printing costs
  • Costs of advertising and marketing of your business
  • Authorised bank charges
  • Professional fees such as your accountant, bookkeeper or solicitor
  • Eye tests for employees using computer equipment

If you aren’t sure whether or not something can be claimed as an expense, be sure to double check with your accountant or call HMRC directly.

Your Expenses and Futurelink Group

At Futurelink Group we offer a comprehensive limited company solution that can take care of as much or as little of your accountancy needs as required. Our team of expert accountants will ensure that they expenses you claim are accurate and fully compliant with the latest regulations.Our expertise extends to ensuring we are 100% up to date with the ever changing nature of the financial world and this guarantees your limited company expenses are handled correctly. Meaning you can rest assured that your tax affairs are in safe hands and you can focus more attention on the day to day running of your limited company.

That covers limited company expenses, but you might also be interested in the following pages:

“I’ll most certainly pass on your details to people I know. You run a great service there, keep up the good work.”

William Cadden, Self-Employed Contractor

“For me, Futurelink Group was the best solution, as a foreign and a lack of knowledge of the UK rules, they were extremely helpful in all aspects. Always fast in answering all my questions. I almost didn’t do anything and they put me on track to invoice and receive my payments. I can fully recommend them.”

Ronaldo, Umbrella PAYE contractor

“WS Contractors Ltd are extremely happy with the services that Futurelink provide. The efficient and friendly staff are always willing to help and assist. The feedback from our operatives is positive and pleasing. We would recommend Futurelink to all new recruits joining our team.”

Michelle Hughes, WS Contractors Ltd

“We at Gemini would like to thank you and your team for all your help and support in connection to payroll solutions. We find Futurelink Groups approach to be responsive to action when required with a courteous and bright manner – keep up the good work!”

Frank Mcfarlane, Gemini Security Services Ltd

We have strict compliance procedures in place, we are ISO:9001 accredited and we also carry out regular independent audits of our processes so you can be sure you are in safe hands. Companies within our group have been accredited with the following:

Futurelink Group consists the following companies, all incorporated in England & Wales: Futurelink Group Ltd (0620 6129), Futurelink Umbrella Ltd (0532 0148), Futurelink Accountancy Services Ltd (0532 0147), Team Construction Ltd (0415 9963), Team Administrative Services Ltd (0493 5270), Horizon RCS Ltd (0620 6202) and Horizon RCS Europe Ltd (0620 6136). Privacy Policy | Terms & Conditions