Filing a company tax return can be tedious. As a director, you can claim various business expenses incurred for the purpose of running your company. The question is, what can you claim for?
At Hanley & Co. Accountants, this month’s blog looks at what expenses you can claim as a Limited Company. For more information, call us in Staveley, near Kendal on 01539 821869.
What Are Allowable Expenses?
Allowable expenses are essential business costs that are not taxable. When calculating taxable profit, businesses are able to subtract these costs from its income.
However, only certain things can be deemed as an expense. Therefore, it is important to understand what is allowed and what isn’t.
What Expenses Can Limited Companies Claim Tax Relief On?
Only certain costs can be claimed as allowable expenses. This includes:
Daily Business Costs
Allowable expenses include your basic office costs, such as stationery and phone bills. Travel costs and staff salaries are also included.
Additionally, the cost of your business premises is covered, including utility bills and rent.
Insurance Costs
As a business owner, business insurance provides peace of mind. If an incident does occur, your business is protected.
Similar to daily expenses, insurance costs fall under allowable expenses, as long as your cover is solely for business purposes.
Vehicle Running Costs
If you are using a vehicle for business purposes. The running costs can add up. If you’re travelling by car or van, you can claim a limited amount of fuel expenses. However, your commute to your daily place of work is not tax deductible.
Make sure to keep a mileage log of any business journeys. Although it is not necessary to submit when you claim your mileage deduction, HMRC may want to see your records.
Use of Home for Business
If you run your company from home, you can claim some of your bills as allowable expenses. This includes heating, electricity, internet etc. However, you will need to calculate this properly.
You can use the Government’s simplified expenses, which calculates your allowable expenses using a flat rate which is based on the number of hours per month you work from home.
What Can’t I Claim?
When claiming allowable expenses, it is important to differentiate between business costs and personal expenses. If you use money from your company to pay for a personal expense, you shouldn’t add it to your annual allowable expenses.
For small business owners, some expenses can cover both business and personal costs. However, only the business costs can be claimed. An example of this is using your vehicle to travel to clients but also using it outside of work – you can only claim your work-related expense.
Contact Hanley & Co. Accountants
If you require accounting advice, contact Hanley & Co. Accountants in Staveley, near Kendal. Serving across Cumbria, call us on 01539 821869. Alternatively, send us a message via our contact form and we will be in touch.
