One of the great benefits of setting up a limited company is that you can claim the following legitimate business expenses:

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 redspotted