Guide to Expenses

Expenses claimed through your limited company must be wholly and exclusively necessary to the business. You MUST keep all receipts so that they can be provided to HMRC should they want to investigate the company.

The most common expenses claimed through a company include:

Mileage

Travelling to and from client sites or temporary workplaces can be claimed:

  1. If you use your own cars for business travel you can reclaim fuel and running costs at a rate of £0.45p per mile for the first 10,000 miles and £0.25p per mile for all other miles, per tax year.
  2. Motorcyclists can claim £0.24p per mile and cyclists £0.20p per mile. Car passengers can claim £0.05p per mile.
  3. If you claim mileage this covers Insurance, Road Tax, Repairs and MOT on your car.
  4. You can only claim mileage OR petrol. You cannot claim both. Mileage is usually more tax efficient, however if you pay for your petrol through your company then you cannot reclaim mileage.

Travel Costs

Expense claims can be made against air, train, bus, taxi and sea going travel fares provided that they are incurred in the course of performing work.

  1. Road tolls, parking costs and congestion charges can be claimed in addition to mileage.
  2. You CANNOT claim against speeding fines, fixed penalties or parking tickets.
  3. All claims must be supported by original receipts.

Overnight Accommodation

The cost of being away from home while on business is tax deductible but all costs must be reasonable. Original receipts must be available to support expense claims.

  1. If you stay away from home during the week, because your end client is based too far away to travel each day, then the rental cost is also allowable. However, if for convenience you stay there for the weekend, you should only claim the expense for when you are there working. For example if you are staying there 7 nights, but only working 5 days, then the 2 days should not be claimed as a business expense.
  2. You would really need to have your limited company as the name on the contract.
  3. If you are staying in one place for a substantial period it would be a strong indication that you are caught by IR35 guidelines and it would be akin to a permanent place of work.

Meal Allowances

HMRC operate a live to eat scheme, which means that meal cost incurred while working away from a normal place of work are tax deductible expenses. ALL RECEIPTS MUST BE KEPT unless you have set up a dispensation with HMRC.

Home Office Costs

If you work from home then it may be possible to offset certain expenses. These would need to be calculated on a room basis and time apportionment basis, e.g. one room in a house of eight rooms, and five out of seven days a week. These bills would then be calculated to equate for this percentage. Examples of these expenses include:

  1. Rent and council tax charges
  2. Gas and Electricity charges
  3. Business telephone call and line rental costs
  4. There is the alternative option of a simplified flat rate £4.00 per week charge for home office use.
  5. Please Note: This is most likely to be challenged by HMRC should they decide to investigate your business. Professional advice should be sought before any expense claims are submitted.

Professional Membership Fees

If you are a member of a professional body, which relates to the trade, your annual subscription is allowable, along with any continuing professional development to maintain the membership.

Training

Training costs are an allowable expense providing that the course and its contents are skills that are wholly applicable and required to function and perform duties. Original receipts must be presented to support training claims.

Safety & Protective Clothing

This is classed as an allowable expense providing they are wholly applicable to the environment and the duties performed. For instance if you were to buy an ordinary shirt then you cannot claim this as an expense because it could be worn for other occasions. However if you are to buy a shirt that has your business name on then this could be classed as an expense. This would also include hi-vis wear, safety boots etc.

Mobile Phones

If you wish to have a mobile phone for your limited company then it would need to be on a separate contract than your personal phone, and the contract would need to be in the company name.

The above is a list of the more common expense claims. It is not possible to provide a definitive list of allowable expenses as each contractor’s business will be different.

Further Information

All our clients have been appointed with a dedicated Client Accountant, who is their main point of contact and will be able to provide you with further advice on Expenses.

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