Ltd Company: What expenses can I claim? Complete list


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Money

One of the great benefits of setting up a limited company is that you can claim the business expenses detailed below. For more information you can download our free expenses guide.

What is a business expense?

A business expense is any expenditure that is “a wholly, exclusively and necessary expense” incurred by the business for its performance of day-to-day duties. There is no duality of purpose for mixed business and personal usage.

What expenses are tax deductible?

  • Accountancy (all fees including advice pre company incorporation and accounting software)
  • Accommodation
  • Advertising
  • Air fares (exception of 1st class)
  • Annual company fee
  • Bad debts (debt 6 months unpaid, VAT needs adding back to output tax if not cash accounting or flat rate scheme)
  • Bank charges
  • Bicycles and related costs
  • Broadband internet
  • Business gifts (Corporate: Max of £50 in a 12 month period. Food, alcohol and tobacco do not qualify)
  • Business start-up (Incorporation fees, VAT, PAYE and Corporation Tax registration fees, accountancy advice, lawyers advice/contracts drawn up)
  • Capital allowances (Depreciation on assets)
  • Car hire (Proportionate if there is an element of personal use)
  • Childcare vouchers
  • Christmas gifts (need 2 or more employees other than just Director to qualify. Alcohol, food and tobacco do not qualify)
  • Charitable donations
  • Clothing (Uniform and not used for personal use)
  • Computer equipment (Under the net value of £500)
  • Company formation fee
  • Conference expenses
  • Depreciation (On assets above £500 net value, either straight line or reducing balance)
  • Director’s salary
  • Entertainment
  • Eye test
  • Foreign exchange costs (Costs of converting foreign invoiced revenue back to sterling)
  • Health check BUPA and other annual screening check for director or employees
  • Hire and rental charges
  • Hire purchase (Agreement must be in the company name)
  • Home working expenses
  • Insurance (Office contents, Employers liability, Executive income protection, Key man life, Jury service, Motor, Tax investigation, Permanent & private health, Professional indemnity, Public liability)
  • Interest on business loans (in company name)
  • Key man life insurance
  • Leasing rental (in company name)
  • Legal costs (Breaches of law and penalty payments are not allowable)
  • Magazines and Books
  • Marketing costs
  • Medical insurance (foreign contracts only)
  • Medical treatment (only when on business abroad)
  • Mileage
  • Mobile telephones
  • Motor vehicles (company owned, no improvement costs)
  • National insurance contributions (Not class 1a)
  • Office rental
  • Parking (£5 daily for un-receipted)
  • Patent costs
  • Pensions provided to employees (seek professional advice from an independent advisor)
  • Postage (no VAT reclaimable)
  • Professional fees
  • Printing
  • Property rental (apportion where private)
  • Repairs to equipment
  • Salaries and wages
  • Software (incl. accounting / business software)
  • Sponsorship (Allowable when given freely, no VAT needs to be charged)
  • Stationery
  • Subsistence
  • Taxi fares (‘adequate’ fares are allowable)
  • Telephone (proportional if not in the business name)
  • Training courses (must be relevant to the nature of the business)
  • Training manuals or books (Allowable when specific to business)
  • Travel
  • Use of home as office (£3 weekly HMRC approved)

Many of these claims are a tax deductible grey area and require further reading for more specific detail, when unsure it’s always best to check HMRC’s website for exact specifications on claims, or speak to your accountant.

Photo by Nadir Hashmi

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  • Adam

    Does this mean that these expenses can be fully reclaimed or just the VAT amount?

  • Perry

    If you are VAT registered and using the Standard scheme you would claim the net cost of these expenses in your accounts to get relief from Corporation Tax. The VAT amounts you would include and reclaim on your VAT return.

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  • http://www.searchofficespace.com Office Space Islington

    these expenses are fully claimed or partially?

  • Eddie mcguire

    can i claim for rented computer equipment?

  • Sovett

    I have to travel a long way by car to my contract on a Monday morning and return Friday evening. I take one break each time to buy coffee and perhaps a paper before I continue my journey, can these items be claimed as a business expense?
    Also after work and before I go to my B&B I will buy a coffee and a paper and was wondering if this can also be claimed as a business expense?
    Thanks for any replies

    • http://twitter.com/TeamCrunch Crunch

      Sovett,

      Regrettably not! Assuming you’re claiming for the B&B and mileage already?

  • Anon

    Where are you sources for this article?

  • Mike

    Can you claim supermarket food bills if you are working away from home

    • http://twitter.com/TeamCrunch Crunch

      Hi Mike,

      Lunch costs incurred whilst working at a client’s site would be ok – for example a sandwich from Tescos. Something like a weekly shop would not be.

  • Drvineet008

    As a director of the limited company, can I claim cost of my UK visa extension fee

  • UK Protection Service

    Can a Security Company Claim against the costs of 2way radios.. it total the cost has been close to £10,000

    • http://twitter.com/TeamCrunch Crunch Accounting

      Hi there – like most everything else, if they’re purely used for business purposes then yes!

  • John Armstrong

    Can I claim parking fees as my place of work will be losing it’s free car park?

    • http://twitter.com/TeamCrunch Crunch Accounting

      Hi John,

      Yes (assuming you mean fees and not fines!) as long as you’re a temporary contractor, and not working at this site for longer than 24 months.

  • Russell

    Hello Crunch – is this discussion facility still live?

    • Crunch Accounting

      Hello Russell – it certainly is. :)

      • Russell

        Hello

        Re. Sole trader or Ltd co?
        I am looking at becoming a sole trader working under a
        service agreement for a luxury brand. Turnover is low but values are
        considerable hence the commissions start at a high level.

        As I am currently unable to self fund myself the company are
        offering me a draw against commission in advance (which is confirmed as non
        refundable). Due to the nature of the role there will be a lot of foreign
        travel and therefore expenditure (circa £2,500pcm) + my travel costs
        (commuting) to the office are also very substantial at £10,775 p.annum – (train,tube,
        parking and running a car)

        If I went the sole trader route we have calculated my total
        deductible costs would be circa £3100 per annum

        Non deductables are =
        £14000 per annum (ie commuting, entertaining & car costs)

        All this in mind an accountant friend has calculated I will
        need a gross annual draw of £100,000 pa to meet these costs, pay my tax
        commitments and leave £3,500 pcm to run the household

        My question is – would I benefit significantly if I set up a
        limited company and went that route instead of sole trader? I understand my
        home address could be the registered address and I would be able to offset
        those very significant commute to work costs?

        Your advice will be much appreciated

        • Crunch Accounting

          Quickest way to find out would be use our take home pay calculator -

          http://www.freelanceadvisor.co.uk/money/take-home-pay-calculator-for-freelancers-and-contractors/

          Just plug those values in and it’ll spit out a saving. If you’d like a more detailed calculation I can arrange a chat with one of our advisors.

          • Russell

            great – thanks
            so can I add the travel to work costs (which I cant as a sole trader) when calculating the ltd company numbers? Cheers

          • Crunch Accounting

            The rule of thumb for business expenses through limited companies is that they must be “wholly, necessarily and exclusively” for business use. If your travel fall into this category then you can claim it back.

            There are slightly different rules for temporary and permanent workplaces – Google “the 24 month rule” for more information.

  • Ivor Lawrence

    do you have to register as a paye employee in order to reclaim expenses from your limited company?

    • Crunch Accounting

      Hi Ivor,

      It is recommended you register a PAYE scheme if you are likely to be claiming expenses as some expenses are required to go on a P11D, and if you need to complete a P11D you need a PAYE scheme!

  • Vicky S

    What’s the situation if you’re self-employed rather than a Ltd company? Sometimes I work at home, sometimes I’m at the client site. I understand the former I have home bill expenses which I can put against my tax; the latter I have travel expenses – can I do the same, or am I best to just say I work at home all the time?
    Would you advise setting up a Ltd co? And if I did that now, would I claim expenses under that retrospectively for bills incurred prior in the financial year?

    So many questions! Thanks in advance for helpful advice.

    • Crunch Accounting

      Hi Vicky,

      You can claim the travel expenses as well as the use of your home.

      Setting up a limited company would depend on your level of income, but often it is better to do so. Only relevant expenses would be claimed through the limited company, and you would generally want to claim any expenses against sole trader income as this is taxed at a higher rate (and would therefore want to reduce the taxable profit as much as possible).

      If you’re thinking about incorporation give http://www.golimited.co a look!

  • Acodez

    I am about to start web design company(limited company). I will be only one working in UK, people who will be actually designing, programming,.. are from India as an outsource company. That means if I give an invoice to customer of 2000 and Indian company sends me invoice of 1000, that means that taxable amount is 1000 only, right? Thanks

    • Crunch Accounting

      Hi there, apologies for the slow reply – somehow missed this one!

      The answer is yes, as you are only taxed on your profits in this case corporation tax would only apply to the £1000 profit (and in fact is likely to be less than that with other expenses included).

  • ripudaman nanda

    As a private limited company. Can i pay my staff in India salary and get tax rebate on the the expense.

  • David G

    I work full time for a company and pay tax via PAYE. I also do some freelance work at home for another company. Can I claim some computer and other home expences against this extra income?

    • Crunch Accounting

      Hi David,

      Assuming that the non-PAYE income is sole trade income and assessed via Self Assessment, expenses (computer costs, use of home, travel etc.) can be offset against the other income.

  • tracey oultram

    Hi, I am freelance graphic designer and currently my work if fairly quiet. Are there any benefits you can claim during quiet periods or do they take into account joint income etc?. Any advice appreciated, I find it difficult as my work can be very up and down quantity wise but my income does support my family.