A - Z of Claimable Expenses
Own your own business? Ltd, Sole Trader or Partnerships are all effected in wondering what expenses they can claim. What should be OK what is OK and what is definitely NOT OK?
Accountancy – of course CASA is here for you and you can claim all of our expenses both pre and post formation
Accommodation – Whist away from primary residence in relation to your working duties, hotel or B&B may be claimed. Some property rental is allowance but check with your accountant first.
Advertising – Can be confused with sponsorship so be careful but normal advertisements are allowable in the course of the business.
Air Fares –Allowable but if you recharge your clients even though there is no VAT on flights when recharging include VAT.
Annual Return Fee (LTD Only) Allowable but no VAT on this one please!
Bank Charges – Bank charges that are authorised are allowable but unauthorised overdraft aren’t so keep within your spending. No VAT on bank charges though so again be careful here.
Broadband/Internet - Wi-Fi costs are allowable. If the contract is to the business then this is allowable however if you’re working from home on an adhoc basis or the contract is under personal name then check with your accountant for further guidance.
Business Gifts – If being used as a marketing tool then up to £50 in a given year is fine. Adverts for Alcohol, tobacco and food are not deductible.
Car Hire - If the vehicle is hired purely for business use, the whole expense is allowable however where combined business and personal usage is to be accounted for Approved Mileage Allowance Payments (AMAP for short) should be applied.
Christmas Gifts – For one director companies Christmas gifts are not allowable as there has to be a minimum of 2 employee’s. Again there are restrictions on the type of purchase but if you keep within the guideline’s then if the gift is under £50.00 then this can be allowed, anything over this amount BIK (benefit in kind) comes into practice.
Company Incorporation – This is a capital expense and cannot be claimed against corporation tax however the director can be reimbursed for the monies spent.
Directors Salary – Salaries are allowed but the amount should be set according to the individual’s remuneration strategy. A minimum salary of the lower NICs level is advised to a UK resident to ensure state pension provisions are made. A director without a contract is not bound by the NMW regulations.
Entertaining – Entertainment whereby you take a client out for a meal is not allowable against tax and neither can the input VAT however if it is business entertaining to the employees and the director attends then all of the input VAT may be claimed. Remember though – Alcohol cannot be claimed against ANY tax!!
Eye Tests – Monitor users are able to be reimbursed the cost of an eye test without it being a benefit in kind. The company can also claim the full cost as an expense.
Foreign Exchange – Any exchange rates associated with exchanging business funds are allowable as an expense. Profit made must be declared as an income stream and be subject to corporation tax.
Home Working Expenses – A round sum of £4.00 a week is allowable without supporting evidence. If you have a standalone office at home that is not used as part of the home for any other purpose then different rules apply. Speak to your accountant for more details.
Insurance – Ltd Companies that has employees is legally obliged to have Employers Liability Insurance. Professional indemnity insurance must be taken if specified in a contract for the companies’ services. There are many business insurance’s and most are claimable. There is no Input VAT on insurance products.
Interest on Loans – Interest charged on business loans or alternative finance payment is allowance. The same applies for company credit cards and overdrafts.
Key Man Life Insurance – this insurance provides a policy in the company name that is the beneficiary in the event of a sudden loss of the key personal in the business. It basically covers the cost to employ another key person to save the business.
Legal Costs – Legal costs for business purposes are allowable providing they are not incurred due to fines, illegal actions or related capital items.
Marketing Costs – Marketing is an allowable expense however the cost of developing a website should be treated as an intangible asset and capitalised on the balance sheet.
Magazine and Books – A company can claim for certain books, publications and journals however under HMRC guidance it states they are ‘reasonably incurred’.
Mileage – These costs can be claimed for costs of business journeys under the Approved Mileage Allowance Payments Scheme https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax
As a guide:
Cars and Vans – First 10,000 miles 0.45p per mile
Cars and Vans – Over 10,000 miles 0.25p per mile
Motorcycles 0.24p per mile
Bikes 0.20p per mile
Electric Vehicles 0.08p per mile
PAYE – this is the tax and national insurance you deduct from a member of staffs wages plus employers NI. This is payable on the 19th of each month unless on quarterly returns.
Subsistence – These are expenses incurred during business travel such as a meals and drinks although remember the no alcohol rule! Pay for any wine or beer separately to your subsistence receipt. When away from home there are daily allowances that can be claimed also.
Travel Expenses – Businesses can claim travel costs aside from mileage expenses already mentioned. HMRC states that the deduction of the whole cost is allowed where attendance is necessary. Please note however that this does not include ordinary commuting travel or private travel.
Accountancy – of course CASA is here for you and you can claim all of our expenses both pre and post formation
Accommodation – Whist away from primary residence in relation to your working duties, hotel or B&B may be claimed. Some property rental is allowance but check with your accountant first.
Advertising – Can be confused with sponsorship so be careful but normal advertisements are allowable in the course of the business.
Air Fares –Allowable but if you recharge your clients even though there is no VAT on flights when recharging include VAT.
Annual Return Fee (LTD Only) Allowable but no VAT on this one please!
Bank Charges – Bank charges that are authorised are allowable but unauthorised overdraft aren’t so keep within your spending. No VAT on bank charges though so again be careful here.
Broadband/Internet - Wi-Fi costs are allowable. If the contract is to the business then this is allowable however if you’re working from home on an adhoc basis or the contract is under personal name then check with your accountant for further guidance.
Business Gifts – If being used as a marketing tool then up to £50 in a given year is fine. Adverts for Alcohol, tobacco and food are not deductible.
Car Hire - If the vehicle is hired purely for business use, the whole expense is allowable however where combined business and personal usage is to be accounted for Approved Mileage Allowance Payments (AMAP for short) should be applied.
Christmas Gifts – For one director companies Christmas gifts are not allowable as there has to be a minimum of 2 employee’s. Again there are restrictions on the type of purchase but if you keep within the guideline’s then if the gift is under £50.00 then this can be allowed, anything over this amount BIK (benefit in kind) comes into practice.
Company Incorporation – This is a capital expense and cannot be claimed against corporation tax however the director can be reimbursed for the monies spent.
Directors Salary – Salaries are allowed but the amount should be set according to the individual’s remuneration strategy. A minimum salary of the lower NICs level is advised to a UK resident to ensure state pension provisions are made. A director without a contract is not bound by the NMW regulations.
Entertaining – Entertainment whereby you take a client out for a meal is not allowable against tax and neither can the input VAT however if it is business entertaining to the employees and the director attends then all of the input VAT may be claimed. Remember though – Alcohol cannot be claimed against ANY tax!!
Eye Tests – Monitor users are able to be reimbursed the cost of an eye test without it being a benefit in kind. The company can also claim the full cost as an expense.
Foreign Exchange – Any exchange rates associated with exchanging business funds are allowable as an expense. Profit made must be declared as an income stream and be subject to corporation tax.
Home Working Expenses – A round sum of £4.00 a week is allowable without supporting evidence. If you have a standalone office at home that is not used as part of the home for any other purpose then different rules apply. Speak to your accountant for more details.
Insurance – Ltd Companies that has employees is legally obliged to have Employers Liability Insurance. Professional indemnity insurance must be taken if specified in a contract for the companies’ services. There are many business insurance’s and most are claimable. There is no Input VAT on insurance products.
Interest on Loans – Interest charged on business loans or alternative finance payment is allowance. The same applies for company credit cards and overdrafts.
Key Man Life Insurance – this insurance provides a policy in the company name that is the beneficiary in the event of a sudden loss of the key personal in the business. It basically covers the cost to employ another key person to save the business.
Legal Costs – Legal costs for business purposes are allowable providing they are not incurred due to fines, illegal actions or related capital items.
Marketing Costs – Marketing is an allowable expense however the cost of developing a website should be treated as an intangible asset and capitalised on the balance sheet.
Magazine and Books – A company can claim for certain books, publications and journals however under HMRC guidance it states they are ‘reasonably incurred’.
Mileage – These costs can be claimed for costs of business journeys under the Approved Mileage Allowance Payments Scheme https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax
As a guide:
Cars and Vans – First 10,000 miles 0.45p per mile
Cars and Vans – Over 10,000 miles 0.25p per mile
Motorcycles 0.24p per mile
Bikes 0.20p per mile
Electric Vehicles 0.08p per mile
PAYE – this is the tax and national insurance you deduct from a member of staffs wages plus employers NI. This is payable on the 19th of each month unless on quarterly returns.
Subsistence – These are expenses incurred during business travel such as a meals and drinks although remember the no alcohol rule! Pay for any wine or beer separately to your subsistence receipt. When away from home there are daily allowances that can be claimed also.
Travel Expenses – Businesses can claim travel costs aside from mileage expenses already mentioned. HMRC states that the deduction of the whole cost is allowed where attendance is necessary. Please note however that this does not include ordinary commuting travel or private travel.