What expenses can I claim?
The general rules are that:
(i) costs you pay with the sole purpose of earning business profits are allowable expenses and
(ii) you cannot claim any expense that is not evidenced by a receipt (plus in
order to reclaim any VAT incurred as part of the expense the receipt must be a valid VAT
This document gives brief guidance on the expenses that may be claimed AND should not be read
that you can claim all such expenses in every instance.
You can claim actual meal costs whilst you are working at a remote site, away from your normal place of work. Deciding upon what is your normal place of work can be complicated. SO keep a record of your meal receipts and where you were working on that particular day. PLEASE NOTE - NO receipt THEN no valid expense claim.
You can claim the cost of travel to and from your temporary place of work (this assumes that your normal place of work is your home). If you use your own car the mileage rates are 45p per mile for the first 10,000 miles in any fiscal year and then 25p per mile thereafter. This allowance is to cover fuel and running costs of the vehicle. If you are travelling to work as a passenger in a car you are entitled to claim 5p per mile. You can also claim for parking
and the congestion charges but you may not claim for parking fines or speeding fines. The cost of travel by public transport can be claimed but you must have a valid receipt. A mileage allowance can also be claimed for travel by motorcycle and bicycle at rates of 24p per mile and 20p per mile respectively.
Note 1: PLEASE keep a daily log of where you travel and the mileage undertaken.
Note 2:. You must observe the 24 Month Rule.. If you are working, or expect to
work, at the same site for a continuous period of more than 24 months, you may
not claim tax relief for travelling, accommodation or subsistence. A continuous
period is accepted by HMRC as meaning more than 40% of your working time at the
same site over a period of more than 24 months.
The cost of hotel or bed and breakfast accommodation can be claimed as an expense, as can the reasonable cost of additional meals taken in conjunction with overnight accommodation. NB The costs must be covered by a valid receipt.
Providing the training course is wholly and totally relevant to the performance of your duties under your existing contract/business then you can claim this as an expense.
Pension contributions represent a significant and genuine tax
saving and you should take appropriate advice on the suitability of a company pension scheme for you. Furthermore in the unfortunate event of you not being IR35 compliant (also see below) this can provide a significant reduction in your tax liability.
Providing you have a child enrolled in a qualifying nursery/day care facility or a registered childminder, your limited company can pay up to £55 per week (free of income tax, NI and corporation tax) towards their care. If your partner is also an employee of your limited company, then each of you will be able to claim. Please ask us about this benefit as this will need (a) an initial assessment and (b) ongoing administration, in order to comply with HMRC rules.
You can claim a flat rate of £4 per week (£208 per annum) for an office in your private dwelling without providing any evidence or receipts. Further amounts are claimable based on sq ft and time spent metrics but please speak to us for guidance as this is a
The costs of business related calls are allowable. Your Limited Company is permitted to take out one mobile phone contract. The monthly contract fees are then allowable; however, any personal calls are disallowed. If the phone and/or contract are not under your company’s name, it cannot be claimed back as an expense, apart from the cost of business calls only.
Software packages and programs incurred solely for use in your line of business/contract are allowable.
Hardware (computers, printers, peripherals etc)
Computers and printers are allowable and will attract capital allowances as long as it can be demonstrated that they are used in the course of your contract/business. From 6th April 2014 the first year annual investment allowance (AIA) in 2014/15 has been increased to £500,000 for a temporary period ending on 31st December
Items acquired for general family use will be disallowed.
Books, Periodicals and Professional Subscriptions
Certain professional subscriptions, books and periodicals are allowable as long as they are relevant to your business/contract.
Accountancy fees are allowable expenses.
The cost of business broadband is exempt from tax as long as the contract is in the name of your company/business and paid for from your business bank account.
If you cannot prove that your business broadband is separate from your private internet, costs cannot be claimed back. However, if you can use broadband for both business and personal, you’re able to claim 75% of the broadband bill.
General office purchases
Minor purchases with receipts that are used wholly and exclusively and necessarily in the performance of your duties are claimable. This includes postage, computer consumables and office stationery. An annual tax free social function (Christmas Party) is allowed of up to £150 per head per
director/staff member. Partners of directors/staff are also allowed.
What if I am NOT IR35 COMPLIANT?
If your contract is caught by IR35 then the only expenses claimable are a general expense deduction of 5% of your contract income, pension contributions and certain professional subscriptions.