Countplus

expenses as a limited company

What Expenses Can I Claim as a Limited Company?

Claiming expenses as a limited company has a number of benefits. It can improve your take-home pay, and reduce your tax bill. But it can be hard to know exactly what expenses are allowable, how to track and claim them, and what to look out for to make sure you’re compliant with HMRC.

In this guide, we’re going to cover all of this, so if you own a limited company, keep reading to find out exactly what expenses you can claim and how it can help you to run your business more efficiently.

Expenses You Can Claim as a Limited Company

Use of Home as Office

3 years ago, this expense was not quite as prevalent as it is today but Coronavirus changed the landscape. It forced both employees and business owners to work from home. Not only that, the pandemic pushed a huge number of people to take the step and start their own businesses.

While there are “simplified expenses” for sole traders whereby they can claim a flat rate for hours worked at home, this option isn’t available to limited companies. You must be able to prove any claims that you make, and you can’t claim expenses where there is “duality” i.e. it’s an expense that can be both business and personal.

You can claim for phone and internet, but only if the contract is in your company’s name.

Marketing and PR Expenses

If you invest in getting your business out there through advertising, marketing, or PR, you can claim the investment as a company expense. Sometimes this is an ongoing cost, or it might be a one-off fee. 

Travel, Accommodation, and Subsistence

Going on a business trip? You can claim pretty much every aspect of that trip back as a business expense;

  • Taxis to/from the airport
  • Train tickets
  • Flights
  • Hotels
  • Food and Drink

Be sure to record proof that it was, in fact, a business trip!

Eye Tests and Health Checks

If you or your employees spend a lot of time seated at a desk in front of a screen, you can claim back expenses on health checks and eye tests. Prescription lenses and glasses can also be classed as an expense as long as they’re related to the working activity.

Gifts

As we edge nearer to Christmas, you might be considering doing some Christmas shopping for your employees or giving them a Christmas bonus. If you want to avoid paying tax on this, there are some criteria you’ll need to meet;

  • The gift isn’t cash
  • It’s not based on performance
  • It’s not written into their contract
  • It costs you £50 or less

Note: While you don’t pay tax on gifts that meet these criteria, they are not an allowable expense. However, if you want to have a Christmas night out, to a restaurant, for example, this is a deductible expense.

Subscriptions

If you subscribe to a magazine or periodical that is related to your business, you can claim the cost as an expense.

For example, a hairdresser might subscribe to a style magazine to keep up to date with industry trends and find inspiration. This is absolutely a business expense.

Equipment Expenses

Most businesses will need to invest in equipment both at the start of their journey, and as they grow. Things like printers, computers, and even software for these computers are claimable as business expenses. Basically, anything that’s purchased by the business and used for business purposes can be claimed.

Business Insurance

There are a number of different insurances that you can take out as a business—employers and public liability insurance, contents insurance and professional indemnity insurance to name a few. As long as they’re related to the business they’re allowable as a business expense.

Salary and Pensions

If you pay yourself a salary as a limited company director, the salary and the associated National Insurance Contributions are allowable as an expense.

When it comes to pensions, you can add up to £40,000 tax free to your pension pot.

Other Expenses

There are a few other expenses that are allowable as business expenses, such as bank charges, startup costs, training costs and phone bills.

Each of these expenses together can make a relatively substantial difference to both your Corporation Tax and your personal tax bill. Let’s take a look at how to claim these expenses.

How To Claim Business Expenses as a Limited Company

When it comes to claiming these expenses, the most important part is making sure you record them. This might be as simple as keeping receipts and invoices, but if you have employees, it might be worthwhile creating expense forms for them to fill out on a regular basis so that it’s easier for you to repay employees (provided they paid for the expenses personally). 

As a director, you could also pay expenses personally and repay yourself through the company, or you can pay for the expenses directly through the business bank account.

A Summary, and a Few Rules To Go By

Generally speaking, any expense that is legitimately and exclusively tied to business activities is allowable as an expense. There are a couple of rules to help you distinguish between allowable and disallowable expenses, and to make sure you are in HMRCs good books;

  • You can’t claim expenses that are both business and personal.
  • While most expenses can be offset against your Corporation Tax liability, business entertainment is exempt from this, as are a few other expenses.
  • Keep a record of your expenses, even from before you started trading.
  • Claim expenses through your bank business bank account or pay them personally and repay.

If you’re finding keeping on top of your expenses a struggle, get in touch with Countplus. We can advise you and help you with best practices. Check out some of our other guides across the site, or contact us to arrange a free consultation. 



Leave a Reply

Profit Calculator