Ltd Company: Detailed information on the expenses you can claim


in
Money

To find out what you can claim in expenses you can read our guide to the expenses freelancers can claim.

The following post gives in-depth information on claiming business expenses through your limited company.

Accommodation Expenses

Contractors and freelancers can claim accommodation expenses when working on a contract site, attending interviews or going to meetings. Any expenses must be “wholly and necessarily” required and any “personal use” will be disallowed.

Hotels and Bed & Breakfasts

Contractors and freelancers may have to stay away from their normal place of abode when working on a contract site, attending an interview or meeting in order to gain work for their company or while undertaking business related training. The costs involved can be classed as a business expense. The VAT can also be reclaimed.

Personal Incidental Expenses

A director/employee can also claim £5 a night for Personal Incidental Expenses in the UK and £10 when staying outside the UK. This is designed to cover the costs of laundry, newspapers, phone calls home from public phones and so on.

Renting Accommodation

If renting accommodation is a reasonable and cost effective alternative to staying in a Hotel or B&B, then these costs can classed as a business expense. Freelancers and contractors can also claim the associated costs of the utilities at the rented accommodation and Personal Incidental Expenses. The contract for the rental of the property should be in the name of the employer or the Limited Company.

Staying with Friends or Colleagues

The rules for this are no different to the Renting Accommodation rules as detailed above. The Limited Company should have a contract with the supplier, whether that be a friend/relative or colleague.

Bicycle expenses

Freelancers and contractors who wish to travel the healthier way to work can claim bicycle expenses. In 1999 the ‘Cycle to Work Scheme’ was introduced as part of the sustainable carbon reduction policy. This makes it cheaper for freelancers and contractors to go green! The bicycle must remain the property of the company and it must be used more than 50% of the time for travel to work. Contractors and freelancers can simply purchase a bicycle plus necessary equipment in the company name and loan it to themselves. The company will benefit from reclaiming the VAT and capital allowances. The director’s salary may remain at a tax efficient level. Where a worker uses their own bicycle for business travel a mileage allowance of 20p can be claimed.

Broadband Internet

Contractors and freelancers can claim expenses on their Broadband Internet. In order for expenses to fall within the “wholly and necessarily” rules the internet contract must be addressed and invoiced to the company. If the Internet is in a personal name, only the business usage may be apportioned as an expense.

Childcare vouchers

Contractors and freelancers can claim childcare vouchers through a Limited Company under the Government childcare voucher scheme. Through the Childcare Voucher Scheme employees are able to receive up to £55 per week (£243 per month) in childcare vouchers. These are exempt from tax and National Insurance Contributions, and are available to each parent and legal guardian. The scheme can be accessed:

  1. By registering through HMRC
  2. By using a scheme provider who will carry out registration and administration on your behalf

Conditions of the Childcare Voucher Scheme:

  • The child must live with the employee. The scheme is available to each parent or legal guardian.
  • The scheme must be offered to all employees, and all must be able to claim expenses.
  • Vouchers cover children up to the age of 15 and can only be used to pay registered and approved child carer’s e.g. registered childminders, nurseries, after school clubs, holiday clubs etc. Childcare vouchers cover children up to the 1st September after their 15th birthday or if the child is disabled up to the 1st September after their 16th birthday.
  • If a relative is the child carer then they need to registered and also care for other children who are not related
  • A Director’s Limited Company may pay the childcare directly and deduct it against profits as an expense. In this case, the childcare contract should be between the Limited Company and the child care provider.

Director’s Salary

Contractors and Freelancers can save tax by choosing the right combination of salary and dividends. A director’s salary is an annual payment made by the company to the Director and is usually paid at monthly intervals. The gross salary and employers NICs are a deductible expense against the profits made by the Limited Company and so reduce the Corporation Tax payable by the company.

Setting the level of salary is dependent on various factors:

  • Working Tax Credits
  • Job Seekers Allowance and Other State Benefits
  • Earnings from a previous job in the same tax year
  • State Pension Entitlement
  • Personal or Company Pension Contributions
  • Personal Tax Allowance
  • National Insurance Contributions

Entertainment Expenses

For contractors and freelancers entertainment expenses are usually disallowed. However in some circumstances Input VAT may be reclaimed. In order to claim entertainment expenses a distinction must be made between personal and business entertainment. Personal entertainment is not deductible. Business entertainment must not be provided to an employee of the business and must have been free of charge to the recipient.

Expenses that are considered to be business entertainment:

  • Provision of food and drink
  • Provision of accommodation
  • Theatre and concert tickets
  • Sporting events and facilities
  • Entrance to clubs and nightclubs
  • Use of capital assets such as aircrafts and yachts for entertaining

If you are a contractor or freelancer who uses the flat rate scheme you cannot claim Input VAT. However, you may be able to claim subsistence expenses.

Eye Tests

Freelancers and contractors can claim expenses on eye tests.

The HMRC states directors can claim employee expenses on:

  • Eye tests that are required by health and safety legislation for employees who are required to use a computer screen or other VDU
  • Glasses or contact lenses that you’re obliged to provide because an eye test required by health and safety legislation shows them to be necessary for VDU work – as long as the glasses or lenses are only used for VDU work
  • Expenses cannot be claimed on glasses or contact lenses that are used for everyday wear.

Home-working Expenses

Contractors and freelancers who work from home are entitled to claim home-working expenses. There are several different options through which contractors and freelancers can reimburse home expenditure:

Simple Cost

Contractors and freelancers, who work predominantly at their client’s sites and use their home to manage business, keep accounts and search for work, can claim the sum allowance of £156 (the equivalent of £3 per week).

Apportioned Cost

For contractors and freelancers who have a room set aside in their house where more than accounts and paperwork are managed.

Three factors are taken into account when apportioning this expense:

  • Area: what proportion in terms of area of the home is used for business purposes? Work out what percentage of house area is used for business.
  • Usage: how much is consumed? This is appropriate where there is a metered or measurable supply such as electricity, gas or water.
  • Time: how long is it used for business purposes, compared to any other use?

Director owning a property rents some of the use of the property to the Limited Company

For directors of a Limited Company.

The Director of the company calculates the apportionment of the costs as above and charges rent to the company. The rent is shown as income in a self-assessment Tax Return and claims the apportionment of the costs as deductible against income. In this way a Limited Company gets the same benefits as a sole trader. NB: Although this method is effective if there are substantial running costs it will complicate your tax return and may result in a challenge from HMRC.

Separate business premises within the grounds of the house

For contractors or freelancers who use an outside office.

The office must be used only for business use and not for any residential use. If there is any residential use, apportionment options must be used. A separate building used for business exclusively will be an asset for the business and so tax rules for this type of asset will apply. HMRC will view this office as being separate from the main residence and allow tax deductions. The purchase of the building and installing the building will be a capital asset for the business. Costs can be written off over a number of years. The service costs for getting the building to a useable condition will be allowed as costs against the profits of the Limited Company. For the running costs then only the costs associated with the office can be claimed.

Magazine and Book Expenses

Freelancers and contractors can claim expenses for certain books and publications required for their business. HMRC bases its guidance on books and publications expenses on the principle of whether the expense is “reasonably incurred”. When considering books and publications each expenses item should be considered separately.

Before you claim expenses for books and publications make sure that:

  • No-one personally benefits from the item
  • That the publication is a necessity for the business and not for self-interest
  • Generally, books, newspapers and magazines are zero rated for VAT purposes.

Mileage Expenses

Contractors and Freelancers can save tax by claiming tax-free mileage allowance payments for the costs of their business journeys made in their own vehicle, under the Approved Mileage Allowance Payments Scheme. Travel should be to a temporary workplace. A ‘temporary workplace’ is a workplace attended by an employee for a limited duration of time or for a temporary purpose (for the director of a Limited Company this is somewhere attended for less than 24 months.) The approved amount for mileage allowance payments = the number of miles of business travel x the rate applicable to the kind of vehicle

  • Car or Van: 45p per mile for first 10,000 miles, 25p per mile after that.
  • Motorcycle: all 24p per mile.
  • Cycle: all 20p per mile.

Separate calculations are made for each different kind of vehicle. This tax-deductible expense is beneficial for Freelancers and Contractors who have to travel frequently to a temporary workplace. Grab out mileage expense spreadsheet here.

Mobile phone expenses

Most freelancers and contractors will use a mobile phone for business and personal use. If you are a freelancer or a contractor you will be interested to know that you can claim expenses on your mobile phone.

You can claim a mobile phone expense as a tax-deductible expense for both purchase and running costs if:

  • The mobile is owned by the business
  • Invoices are made to that business
  • The phone is provided for business use and has “reasonable” personal usage.

More information for freelancers and contractors:

  • HMRC do not recognise Pay As You Go top up costs as a tax deductible expense for a limited company.
  • Since 2009 Blackberrys, personal assistant devices (PDAs) and iPhones are now classified as mobile phones for the purposes of legislation.
  • If a mobile phone is only used for business then all of the input VAT is reclaimable. If there is some personal usage then only an apportioned amount of VAT may be reclaimed. However, this does not apply with the Flat Rate VAT scheme, as there is no input VAT.

Subsistence Expenses

Subsistence expenses are business travel expenses such as meals. If subsistence expenses are incurred while traveling on allowable business journeys, employers are able to make subsistence payments tax and NIC free. Freelancers should simply reimburse the expenditure they incur, and need to keep receipts/proof expense occurred. Basically you add as business expense and/or claim as directors expense if you have a Ltd company.

Travel Expenses

Freelancers and contractors can claim expenses on travel costs. HMRC states that deduction is allowed for the full cost of travel where necessary attendance is required. ‘Necessary attendence’ refers to the journey made to or from a place that has to be attended in order for the performance of duties to be carried out. This does not include ordinary commuting travel (i.e. travel between home and the ordinary workplace) or private travel.

Want to form a Limited company?

We’ve teamed up with GoLimited so you can be up and running with very own Limited Company in as little as ten minutes, you’ll only pay cost price, and there’s no hidden upsell!

Freelancer company formations

 

Photo by epsos

  • Pingback: #Freelance: Detailed Information On The Expenses You Can Claim | Brian Swichkow’s Blog

  • nikkstorey

    I have just spent hours….correction days, trawling the HMRC website for information that you have supplied on one page, after one google. Now saved you as a priority favourite…Thanks

  • http://www.freelanceadvisor.co.uk FreelanceAdvisor

    Hi Nikk, thanks for stopping by.

    This information will be updated when changes are announced, glad you liked it.

  • vintage_beanpole

    Hi,
    I have a quick question regarding home working expenses – can I still claim the 'simple cost' if I work from home (but only at a desk in a room used for personal use)?
    Thanks!

  • http://www.freelanceadvisor.co.uk FreelanceAdvisor

    Hi there

    Yes, the 'simple cost' (referring to the £156 a year (£3 a week)) is an allowance for working from home, rather than claiming business proportion of home costs.

  • Toby B

    If you're claiming mileage i've just found a site about choosing a car with the lowest running costs – http://www.inniaccounts.co.uk/blog/low-cost-cars

  • http://www.stalbans-builders.co.uk/ St Albans Builders

    You guys are truly cool for sharing this info, I reckon I can save up to 2k from this. Thanks.

  • http://glasgow-restaurant.com Glasgow Restaurant Review

    I am pretty sure I can save loads because of this cheers.

  • http://www.phormd.com Jim

    Ive just come across this – what a great comprehensive site! Im posting this on all my blogs etc its that good!

    One thing you havent covered and what im looking for is I own my own bicycle and its just gone in for its service. Does anyone know if I can claim that back as a director of my own company?

    Brill site again!

    • Vik

      Hi Jim

      as the bicycle is in your own name (not registered to your company) you cannot claim the expense for servicing it same as insurance, other maintenance cost, petrol. Only mileage at allowable rate.
      Hope this helps.

      Accountant

    • http://www.freelanceadvisor.co.uk FreelanceAdvisor

      Hi Jim. As Vik says if it’s your bike you can only claim milage allowance. Have you considered selling your bike to your company? It’ll give you some personal cash (saving you on dividends) and then all upkeep can be run through the company books, this would include cost of new innertubes, servicing, etc.

  • Pingback: Crunch online accounting | Expenses for limited companies | Crunch

  • Anonymous

    Hi i have to register as a freelancer this week..I’ve recently moved to london (in order to do the job) and i’ve had to buy a macbook/rent a hotel until i find a house. Can i claim all of these back as business expenses?

  • http://www.freelanceadvisor.co.uk FreelanceAdvisor

    If you have a limited company you can claim the equipment/MacBook as a
    business expense.

    It might be hard to argue that a hotel room is “wholly and
    exclusively” for work. It’s also a place for you to live while you
    work, presumably at the client’s premises.

    If you’d like to discuss this further give Angelo a call on 0844 500
    8000 — or angelo@crunch.co.uk. If you’ve not got a Ltd Company yet
    he’ll be very happy to help you get set up and moving with all the
    accountancy advice you need.

  • Owen Pritchard

    @pritchardo
    Hi, thanks for this link sent via twitter, its so much better than HMRC.
    Quick question for the Personal Incidental Expense do I need receipts or do I just log £5 expenses with my accountant??
    Thanks,
    Owen

    • http://www.freelanceadvisor.co.uk FreelanceAdvisor

      Owen,

      Unfortunately you still need your receipts!

  • Staceyaduncan

    Hi I spent £500 setting up my company, I used my own debt card because at the time I didn’t have the business account set up, should I class this as a directors loan and can I take it back as soon as the company has made the money back or do I have to wait till the end of the year and keep the receipts and claim it as an expense, I’m a little confused.

  • D_J

    I am working for a fashion company as a freelancer in Italy but I have my own business in London. I need a VAT number in order to get my payment from the company but I am having a lot of trouble applying for VAT itself which is making it impossible for me to compete this important job which is for a limited time only. Is there anything I can do or anywhere I can go for fast track help etc?

    • http://twitter.com/TeamCrunch Crunch

      Hi D_J,

      You need to account for VAT from date you asked to be registered even if you haven’t yet received your VAT number. It can take from one week up to a few months to get a number from HMRC depending on how busy they are and whether they decide they want to query your application.

      If you registered for VAT online you should have received an Acknowledgment Reference Number. If you call the registration unit on 0845 039 0129 and quote this number they should be able to advise where in the system your application is.

  • wales

    Many thanks for sharing this. I actually really liked it. My accountant didnt even provide me with the information…

  • P_L

    Hi there!
    I have registered as freelance working from home. How do I calculate how much to claim of heating/water/electricity/boradbrand costs? Is there a official percentage to use?? Many thanks for a little help… I am very new in this …

  • Peterg11

    Hi, the HMRC document 490.pdf covering expenses says that employees can charge £5/£10/£15 per day or more to cover subsistence expenses under a “scale rate” agreement, but my accountants say “HMR&C generally do not like contractors who are working through their own limited company to use HMRC’s scale charges”. Does anyone know who is right? Can the HMRC “not like” something, i.e. are they not bound by the words stated in their own documents?

    • http://twitter.com/TeamCrunch Crunch

      The “scale charges” are concessions that usually apply to larger companies(i.e. a company will determine a subsistence expense and apply that to all their employees across the board). If, as a contractor, you want to claim higher subsistence expenses, you should keep your receipts to prove your expenditure.

      It’s basically just a case of proving to HMRC that those were your costs – otherwise they simply won’t believe you!

  • freesinger

    I work as a free-lance singer and was wondering as I buy a weekly travelcard to travel to various places i.e. concert venues,churches,rehearsal venues…could I possibly claim a percentile of that expenditure as it would be virtually impossible to work out exactly when and where I have travelled.

    Any help on this matter would be very much appreciated.

    • http://twitter.com/TeamCrunch Crunch

      Hi there,

      You can claim for the percentage of the travel that is business-related. For example if you paid £10 for a 5-day travel card, and only 2 of those days (40%) travel were work related, you could claim back £4 (40% of £10)

      Obviously it can be difficult to prove what was work-related and what wasn’t, so always keep any invoices etc. to prove what days your travel was a business expense.

  • Pingback: How can I reduce my Corporation Tax? | Contractor Advisor

  • Info

    Dear Freelance Advisor,
    Love the clean simple language and very clear signposting on enquiries. Been in business over a year and yet this is still a very helpful too.
    Keep up the good work!

  • jclee500

    I am trying to find work at the moment. Re travel costs – Can I expense my train ticket costs that I pay for to get to interviews? Also once I do find work can I expense my train ticket costs to and fro the normal workplace if it is only for a 6-month contract? And is it worthwhile me becoming vat registered?

    • http://twitter.com/TeamCrunch Crunch

      Assuming you’re a Limited Company, yes, you can claim all the travel as a business expense. If you’re a Sole Trader then you’re out of luck.

      Becoming VAT Registered is a bit of complex issue – read up on it and calculate how much you could save (especially if you were to go flat-rate, more on that here http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5a) to see if it’s worthwhile. Bear in mind it might also make you more appealing to potential clients if you do go VAT Registered.

  • andrew

    hi, i run my own dog walking business, as a result most of my calls are business orientated. if i purchase a mobile and business tarriff what can i claim back?

    • http://twitter.com/TeamCrunch Crunch

      If you’re using the contract solely for business purposes you can claim all of it back, or you can claim the percentage of the total you use for business purposes.

      Bear in mind if you have a Limited Company you’ll have to take out the contract under your company name to be able to claim.

  • jclee500

    Q1. As a director of the limited company I’ve set up I’m going to pay myself through a mixture of dividends and salary. I’ve set my salary at £5,304 pa which is the current LEL for 2011/12. I only started working this month so is it okay to split the £5,304 via eight months payment (May-Dec11)? Or should I be calculating my payments pro-rata eg £5,304/12 = £442 p/mth? Therefore max I am allowed to pay myself for the year is £442 x 8 mths = £3,536? Hope this makes sense. Can anyone help?
     
    Q2. I have a short term contract where I have to travel. Can I put through all my expenses for food and drink on those days through the company? Also the sandwich guy who comes to sell us lunch does not provide receipts..can I still put my lunch costs through without the receipts?
     
    Q3. I’m going to sell my bike to my Ltd Co I set up. Can I sell my laptop too?

  • Ron

    I am a sole director of my own limited company. What is the most tax efficient way to pay myself ? Thanks in advance

  • Guest Freelancer

    Hi,

    Thanks for such clear info – I find it a great help.

    I have a query, regarding this – and I’m not sure if you are still responding to comments – but I’ll give it a go anyway. 

    When you are talking about claiming expenses from your ltd company, do you need to be PAYE registered?

    I set up my ltd company almost 2 years ago and had some poor advice on how to manage my finances, and have been muddling through trying to ‘right’ it all ever since.  I have been paying myself via dividends and salary. However, because the salary was under thresholds, I was advsied by HMRC that I didn’t need to register for PAYE. 

    It’s recently come to my attention that maybe I should actually be PAYE registered????

    Or not – as I am paying myself expenses as the director????

    Can you clarify?

    My last return hasn’t been queried.  I obviously can’t backdate PAYE (or wouldn’t want to because of the £100 a month fine.)  Arrghh – sorry – I do keep meaning to get a decent accountant to deal with this but I am out in the sticks and my current advisor is local and a wellmeaning family friend who will be very hurt if i go elsewhere.

    Kind regards

    Freelancer

    • Guest

      Hi Freelancer, am a ceritfied chartered accountant who may be able to help with your company. I understand you have a family friend dealing with this currently but as you have seen it is important you leave this with someone who know what they are doing; please see our website on http://www.mangoaccounting.co.uk 

  • tom

    I started my web business 6 months ago and STILL find these guidelines excellent.

  • terri:)

    Hi, I am nearing the end of my 1st contract and I am trawling through all my expenditure to date.  Can someone respond to my questions below – thanks :) for info, I take 602.00 a month salary and 2500.00 dividends.

    1. When forming the company and during the 1st few months of trading, I had to pay for expenses from my personal account.  I have retained the receipts – can i just take this out of my business account and write my self an invoice i.e. repaying expenses from business acct to personal.

    2.  As my home is my normal place of work, but I am currently travelling in 20 miles a day, then parking and sometimes buses use, can i take all this expense from my business account and transfer to my business account?

    3. I require glasses for VDU work,  We have free eye tests, but the glasses are 350.00 – can i take this as a company expense – I would not be wearing these for anything else?

    4. How much a day can I claim for drinks and lunches per day whilst working away from my normal day to day business?

    Thank you :)

    • http://twitter.com/TeamCrunch Crunch

      Hi Terri,

      1. It is fine to claim these expenses, on your accounting system record them as paid by director personally and this will include them in your director’s loan account. It is not necessary to write an invoice when repaying, if you record the expenses in this way it should be clear how much is owed to you.
      2. All these travel expenses can be claimed.
      3. The company can pay for/reimburse this expense (if not used for anything other than VDU work) without there being any benefit.
      4. There is no limit so long as the expenses are reasonable and incurred wholly and exclusively for the purposes of the carrying out your business duties – i.e. lunch bought whilst at a client’s site would be claimable, but home meals would not be. As with all expenses you should keep receipts.

  • Beau

    Hi. Im a freelancer and sole trader. I have to travel from home to various venues around the country incurring substantial travel costs. As i understand it, HMRC say that travelling from home means i do not qualify. Do i simply say that my home address is my normal workplace? even though i dont technically work there. (apart from sending the odd invoice, email etc)

    • http://twitter.com/TeamCrunch Crunch

      Hi Beau,

      If the workplaces qualify as a temporary work places (less than 24 months) then you can claim business mileage from your business address (in this case your home) to the temporary workplace.

  • http://twitter.com/jwm0z James Morris

    This is one of the best guides on expenses I’ve seen.  You should update it!  
    Regarding travel costs, i.e. flights, I’ve been told that when I attend a conference, I can claim the conference and flight (due to it being solely for business) as an expense.  Are there any guidelines anywhere?  And When is it valid to be able to claim the cost of the flight, i.e. what evidence do you need to provide?  Receipts?

    Thanks.

    • http://twitter.com/TeamCrunch Crunch

      Hi James,
      The guideline is that so long as the travel cost is necessarily expended for the purposes of the business then the whole cost can be claimed.

  • Guess

    Hi Great site

    What can I claim on daily expenses with a Limited company?
    For example food and drinks while traveling and at work.
    Also do i need receipts like a temporary canteen at work takes cash but doesn’t give receipts

    Thanks

    • http://twitter.com/TeamCrunch Crunch

      Hi Guess,
      Daily expenses can be any cost incurred necessary for the performance of your duties. You will need to have proof that there was an actual expense, getting receipts is the best way of doing this. If receipts aren’t possible you’ll have to find another way of getting proof.

      • Steven slack

        Hi Crunch,

        I have just started a limited company, i work away from home but stay at my uncles house, can i claim any accomodation expenditure for this or do i need him to rite me a receipt in a receipt book etc,

        thanks

        steve.

        • http://twitter.com/TeamCrunch Crunch

          In order to claim expenditure for staying at a relatives house you should ideally not only receive an invoice (of sorts) but actually be paying the money – as with all expenses HMRC may check that the expenditure actually occurred, and that it was wholly and necessarily for carrying out business duties.

  • Rose

    Hello,

    I am slightly confused as to whether I can put food purchases through my limited company as an expense?

    I was under the impression that if you are working away from home (as in
    an overnight stay) it is allowable to claim a small amount of money for
    food expenses.

    I also was under the impression that if you are working closer to home,
    but your day away from home, is over a certain number of hours, you can
    also claim a small amount for food whilst working?

    However, I have also been told that this is wrong – food is a ‘function of life’ and not a business expense…

  • Grant_prophecy

    Hi my partner has just set up his o wn clothing shop. He needs to promote his own wears by wearing the clothing. How do we put this through books? Staff uniform allowance??? Should this b at cost price?? Thanks

    • http://twitter.com/TeamCrunch Crunch

      Hi Grant,

      The cost of this clothing is not a deductible expense for the business and therefore would not go through the books as such. He would personally need to ‘purchase’ the clothes from the shop at cost price.

      More info: http://www.hmrc.gov.uk/manuals/eimanual/EIM32461.htm

  • David

    Hi,

    If I own a limited company and want to purchase a new car which will take me to and from the work place.  Is there any way I can get this from a car allowance?  How do I calculate this?

    Thanks,
    David

  • Ivan

    Add google+ to you sharing and +1 links :)

  • Ivan

    Hi
    We are software developers, I need to buy some equipment (Android devices, IOS devices, ereaders), in order to better assess the market for these devices and apps for them for the future (no current apps in mind or clients as yet).
    The ereader is a question especially as it may not be possible to write apps for this, but there may well be lessons to learn from it for the business none the less.
    Is there somewhere I can go to read the details on what can and cannot be claimed as an expense for my business in terms of equipment?

    Thanks very much.
    Ivan

    • http://twitter.com/TeamCrunch Crunch

      Hi Ivan,

      These could be classed as business expenses so long as they fulfil the ‘wholly and exclusively’ for business purposes rule.

      It’s a little complicated but in your case it sounds as if the whole cost could be classed as an expense – worth reading up on it though.

      • Ivan

        Thanks!

  • LLK

    I am a freelance trainer and assessor . I was employed too deliver and mark 6 sessions to 5 groups. I delivered 5 , they paid me for two and now refuse to pay for the other 3.  I cant afford to go to court, they have ignored my letters – can i offset this amount against my tax as a dab bebt?

    • http://twitter.com/TeamCrunch Crunch

      Hi LLK,

      Yes, that can be offset as a bad debt. Also give you may want to give CreditSafe (http://www.creditsafe.co.uk/) a call, they might be able to help.

  • http://www.gingerninja.net GingerNinja

    Hi

    How often can I claim for an IT equipment refresh?  Is once a year too much?  What do I need to do with the old equipment to satisfy HRMC that I am not just buying lots of computers?  And can I buy equipment for Shareholders in the company?  (OK – that last one may be a stretch? *grin*)

    Thanks

    • http://twitter.com/TeamCrunch Crunch

      Hi there,

      There is nothing wrong with buying more computers so long as they are for use by the company, the company can still continue to use the old computers as well or may sell these on in order to recoup some of the expense. 

      There is no HMRC requirement to be efficient with new equipment purchases.

  • Pingback: Six easy steps to set up a UK business – Part Four | Monty's Outlook

  • Damian

    Hi there,

    I’m currently working in Paris on a huge project and looks like it will be extended for another year or so. My home is based in the UK and I would like to start my own Ltd Company as I provide a rare high level expertise. Can I create a Ltd company back home and claim my expenses for the next year in France. I have not declared myself in France with regards to tax as I go home every month. I read somewhere that I can send ‘myself’ to France as a secondment and claim back my entire rent and other expenses. Is this true?

    Thanks

  • Vimal

    Hi, I manage a portfolio of 5 properties which my family own….do you think i should start up a ltd company for this? We do everything from home…

    thanks

    • http://twitter.com/TeamCrunch Crunch

      Hi Vimal,

      That’s a bit of a complicated subject! Your best bet would be to consult a financial advisor or an accountant who specialises in property.

  • brigitte

    Can you also claim back a percentage of the car tax and insurance and servicing on top of the mileage allowance?

    • http://twitter.com/TeamCrunch Crunch

      Hi Brigitte,

      The Mileage Allowance includes costs for tax and insurance, so no further claim can be made in addition to it. 

  • brigitte

    Also how do I ‘sell’ my computer to my Ltd. Company?

  • Bob

    i underpaid myself by 3100 GBP last yr end. My Accountant informed me to wirte myself a cheque for the above amount.
    Is it necessary to do this and can i just filter it gradually through my dividend payments?

  • Am

    Hi Guys,

    great advice, i wonder if my situation is unique…i’m about to set up a UK ltd company but i live and work in spain.90% of the money coming into my company will be from outside the UK, what do i need to do re: charging VAT for services? and what would be my tax return rules? is it income from abroad etc or just taxable income? I am also a employee of a company in spain so i have a spanish bank account and social security as well…. ever seen anything like it?

    thanks

    A

    • http://twitter.com/TeamCrunch Crunch

      Depending on income amount UK company may not need to be registered for VAT, if it does it would not charge VAT on Non-EU sales nor EU sales where your client is VAT registered in their country (and you have their VAT number). UK sales would be chargeable to VAT as normal.

      Assuming you are resident in Spain, and all UK company duties are performed abroad, you could ask HMRC to give you an NT tax code and an X code for NI, and pay all tax and social security in Spain, this often means that you would be better off taking all company profits as a salary to avoid UK corporation tax as well.

      A lot of assumptions have been made here, and of course this all depends on the specific situation, as every one is unique, so getting further tax advice is definitely recommended.

  • Blmofe

    Just wicked. Thankyou

  • ianf2

    I have just started a limited company and wondered if I can claim for a garage extension as an office?

    • http://twitter.com/TeamCrunch Crunch

      Hi Ian,

      Unfortunately not. You can do a use-of-home-as-office calculation (above) in which the area of the extension or office is used as the basis. But as the garage is part of a personal property it would not be possible to claim the actual cost of the extension.

  • John

    Hi

    I came across your excellent site while looking for
    information relating to using a bicycle for work.

    Basically, I’m the sole director and share-holder of a
    limited company.

    I understand that Contractors and freelancers can simply purchase a bicycle plus necessary
    equipment in the company name and loan it to themselves.

    Is there a limit
    to the value that the company can spend on the bike and equipment?

    I seem to remember
    that under the cycle to work scheme the limit was £1,000 before it then got
    complicated with credit licenses etc but does that still apply if there is no
    salary sacrifice in operation ie if I just wish to ‘borrow’ the bike from my
    company?
    Many thanks, John

  • Bananaman

    Hello, Thanks for a very informative website, confirmed pretty much everything I already thought.

    I started a Ltd business just over a year ago and will very soon be due to do my Corp Tax Rtn – not received anything from HMRC yet.

    I do not clam a salary as I also work under a PAYE scheme as an employee for another unrelated company. My own company I started with a view to being employed full time eventually by it (and still have that plan).

    Is it still reasonable for me to have been claiming business expenses (all pretty much in line with the article, mileage and food etc.) although I do not take a salary? (i have been claiming mileage and subsistence.)

    I also have some money in the business bank account and have nothing to do with it so will end up paying corp tax on the lot, anything I can legally do about that to reduce the tax burden?

  • Jaraa23

    I’ve recently formed a Ltd Company, I’m currently working on a contract and have a question about claiming subsistence. 

    The site I work at is pretty much on an industrial estate so the option to go off site and purchase food isn’t a viable one, as a result I have to use the staff restaurant.  However the restaurant is cash less, so meals are purchased using a staff pass which doubles as a top up card.  In the absence of receipts, how do I claim subsistence?

    • http://twitter.com/TeamCrunch Crunch

      Hi there,

      You should keep records of top ups – these are essentially subsistence purchases assuming the money on the card can only be spent in the restaurant. 

      It would be a good idea to also keep a record of daily food/drink purchases, even as a list, to keep HMRC happy in the event of an investigation.  

  • Kt Wood

    Myself and 3 others have recently set up a Ltd company
    rather than a partnership. We used to all do personal expenses which then
    offset our personal tax bill.

    Quick question, now that we are Directors it sounds like we can still claim
    expenses (eg travel) but what do we claim it against as I understand we
    shouldn’t get hit with personal tax? Do we claim it from the Ltd company? If
    that is the case could you please explain how that works and benefits us as individuals?

    Thanks so much
    Katie

    .

  • Harish

    I am a surgeon working in NHS. I also do private and medico-legal work. If I do set up a company, do I run my NHS and company business/accounts separately ? Do I have to get all payments made in the name of the company ?

    • http://twitter.com/TeamCrunch Crunch

      Hi Harish,

      It’s up to you, as long as you make sure it’s managed correctly. You would need to check your NHS contract and pension obligations as this may require work to be conducted through a sole-trader entity or direct employment rather than through a Limited Company. 

  • Fazy546

    i want to open a limited company can you tell me plz how much it cost and how long it takes 

    • http://twitter.com/TeamCrunch Crunch

      Hi Fazy,

      If you use our formation service (www.golimited.co), it’ll cost you £4.50 and it’ll only take a few hours!

  • Haylee

    I am a travelling freelance journalist. I am an Australian citizen and I move countries every year. How do you think it is best to be managing expenses and taxation? As a company based in Australia? Any advice would be greatly appreciated.

  • bonedigger

    Hi can i purchase an iphone through my company without a contract? and use my personal contract to cover calls?

  • Donnie MacDonald

    I registered my limited company last August, but have not started trading yet. I am about to start trading soon. When I started the company i bought computer equipment to the value of £1400, can i now claim this or a percentage of it as expenses or selling it to my company. I have the original VAT receipt, I am also going to register for VAT and can that be claimed, or is it just the purchase price minus VAT I can claim. Hope this makes sense.

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

      Hi Donnie, you can just claim the VAT back on your VAT return, and bring the whole cost of the asset into the company – if you’re using some accounting software it should split the VAT from the asset!

  • Djackall

    HI,

    I have a limited liability company, currently work in the UK as a Tier 1 resident permit holder and have just recently renewed my residency visa. The visa allows me to “work” and “live” in the UK.

    Can I claim back the cost getting this visa? The visa enables me to work in the UK however, I understand HMRC believes there is a personal benefit to me as well. Also, can I also claim back the cost of getting a dependant visa for my wife and child?

    • Crunch Accounting

      Hi there,

      While you can claim the cost back, there is basically no reason to do so as the tax on the personal benefit will outweigh the tax saved by claiming!