When it comes to claiming limited company expenses as a director of a limited company it can be challenging to figure out what you can and cannot claim. One Abacus can help to steer you through the minefield of expenses starting right here. Whilst in theory you can put almost anything through your business, in reality the company will not get tax relief on anything which is not a legitimate business expense. What’s more, you are likely to end up paying more personal tax on the “benefit” you receive from the company. To know which costs are allowable for tax relief, HMRC use the expression “wholly, exclusively and necessarily incurred in the performance of your duties” and they will disallow any expenses that do not fulfil this criteria. It is essential to obtain and retain receipts for all expenses incurred in order to be able to justify the expense if questioned by HMRC. This should be a proper till receipt or invoice, not just a credit card slip and receipts should be kept for 6 years.

LEGITIMATE BUSINESS EXPENSES

Legitimate business expenses are unique to every business and they should contribute towards the company’s future revenue generation. They are likely to include:

• Accountancy fees • Business travel and accommodation • Subsistence • Postage, stationery and printing costs • Business telephone calls (if claiming the cost of the line rental, then the contract should be taken out in your limited company’s name and payment for the line should be made from the business bank account) • Contributions to an executive pension plan • Computer equipment and software • Technical books and business journals • Training course fees (as long as the skills are relevant to your business) • Business insurances • Certain professional subscriptions (must be a professional body included on HMRCs approved list https://www.gov.uk/government/publications/professional-bodies- approved-for-tax-relief-list-3) • Use of home as office (a flat £4 per week without receipts is allowed by HMRC) • Cost of advertising and marketing your business • Company bank charges and interest • Eye tests if you regularly use a computer in course of your work • Business entertainment • Annual Christmas Party event allowance of £150 per employee

HMRC do not allow any expenses that are deemed to be personal/non-business related and can include:

• Ordinary commuting • Items for personal use such as cameras and televisions • Rent, mortgage or council tax of your main residence • Private club subscriptions such as gym or golf club membership • Clothing (except safety clothing) such as business suits • Training courses not related to your business • Glasses - unless used solely for VDU use

Use of a good accounting software like FreeAgent or Xero can make navigating this minefield much easier. However software will never be able to replace the knowledge of an experienced accountant and so for the best advice and management for your business get in touch with us today by on 02086707595 or info@oneabacus.com or pop in in person if your are local to Camberwell, Brixton or Streatham.