We meet a lot of people who are trying to run their business but find it hard to keep track of what they can claim for tax relief and what they can't.
So wouldn't it be nice to have an A-Z guide of the most common business expenses and costs?
Read through our list and make sure you are claiming tax relief on the right things!
You can claim for advertising in newspapers or directories, bulk mail advertising (mailshots), free samples and website costs. You can’t claim for entertaining clients, suppliers and customers event hospitality.
You can claim full cost of an accountant preparing the accounts for your company, however if the company pays for accountants’ fees to complete your own personal tax return, then you would have to report this amount as a taxable benefit on your own return. To avoid this, your accountant may be able to put the cost of accountancy fees for your own tax return to your director’s loan account.
Advertising and marketing
If your company has its own business bank account, you can claim tax relief on the interest payments and charges. You cannot claim interest and charges on a personal account.
Bank interest & overdraft charges
This depends on what the animal actually does for that business.
Guard dogs, working animals, farm animals, veterinary services and guide dogs can call be considered to be eligible expenses .
If you work from home and don’t have a separate broadband contract for your business, you can claim back the full business use of your home broadband from your company by using an itemised bill and a percentage of the line rental. If you pay a fixed fee, you need to work out the percentage of business use and claim on that. Remember, you need to pay for the broadband from your personal account and then claim the business use of the line back from the company.
If you have a separate broadband contract that is solely for business , you should put that contract in the company’s name, and the company should pay the telephone company directly. In this instance, the company can claim tax relief on the full cost of the broadband..
You are likely to be able to claim tax relief on Gift Aid donations made by the company, however the rules on charitable donations are complex and if you’d like more information, then contact us for some guidance.
Charity and CASCs
You can only claim on a few things if you are a director of a limited company. You can ask the company to repay you for things like electricity and gas as long as it has been of extra cost while from working at home. You cannot claim on things that you would otherwise still be paying for, like mortgages or council tax. HMRC have said that any extra costs below £4 a week will not need proof, however, if those extra costs work out to be more than £4 a week, you need to be able to show your workings out to a visiting inspector.
Business use of home
The company may be able to claim tax relief for the cost of providing childcare facilities, or for funding the cost of childcare for its employees’ children.
Protective clothing and uniform can be given to or made available to employees. The company needs to make HMRC aware of his, however there is no extra tax for either company or employee to pay. If the company provides employees with other clothing, this may be a taxable benefit.
If the company gives you computer equipment and you use it for both business and private use, the company will have to pay extra National Insurance because it is considered a taxable benefit.
If the company gives you computer equipment and you use it only for business, the company can claim tax relief on it and will not have to pay National Insurance.
If you have private equipment (e.g computer, desk, etc) and want to bring them into your business, you can find out its market value in order to claim tax relief on it. To do this, you can look on eBay and search for similar items and then include that cost. If still using the equipment for private use, HMRC would consider this a taxable benefit.
If the company buys a piece of equipment second-hand, it can still claim tax relief on that equipment as a capital asset. Don’t forget that unless you have a VAT receipt and the company is VAT-registered, the company can’t reclaim VAT on it.
Computer and office equipment
The director of a limited company cannot claim on council tax, as they’d be paying this anyway – it is a fixed cost.
If you are making a business journey, you can claim that expense from the company at 20p per mile. The company may provide you with a bicycle under a cycle-to-work scheme, click here for more information.
“Working animals”, such as farm working animals and the like are capital assets and qualify for capital allowances. You can put food, veterinary costs, etc. through as a business cost, saving you tax.
If you are the only one in your company and you are working from home, this means you can claim relief on the percentage of your electricity you use for business. Working from an office means that you can claim on the full cost of electricity.
We find that this is a shocker for some people; you cannot claim tax relief for entertaining your clients! You can only claim relief for the entertainment of your payroll employees. And even then, HMRC have provided rules about this: 1) It is an annual event (such as a Christmas party) 2) It is open to all staff, and 3) It costs less than £150 per guest present.
If one of these rules are not met, then it becomes a taxable benefit where the employees would have to pay the tax on that benefit.
Your farm animal is a capital asset if it is part of a ‘production herd’, which is a group of the same species of animals kept for its wool, eggs, milk, etc. while it is still living. Farm animals can also be tax deductible if it is kept as stock.
If you have paid for your own flight, the company can pay you back without HMRC considering it a taxable benefit as long as the flight is between business appointments OR you were flying from a temporary workplace. If you travel from your home to a permanent workplace, the company cannot pay you back since it doesn’t count as business travel.
You can only claim relief on food and drink if you have employees – providing meals at a canteen is also allowable as long as it is available to all staff.
A sole director with no employees cannot claim on food while working, however, if they are out on business and are away from their normal workplace then they can claim the cost back from the company, then the company can claim tax relief on it.
Food and drink
Claiming on gas from the company is allowable if working from home and are the only staff member, as long as you work out the percentage of how much your home is used for business. If there is more than one of you, this becomes a bit tricky. Call us for advice on this. Working from an office means that the company can claim on the full cost.
Want to give a gift to an employee? Click here to use HMRC’s list to see what gifts are considered taxable benefits.
Small gifts may be called a ‘trivial benefit’, You can apply to not pay NI or tax on these kinds of gifts.
Gifts to other people can be claimed on, if meeting these rules: 1) the gift is not food, drink, tobacco or vouchers, 2) it costs less than £50 per recipient per year and 3) it is marked with your logo (e.g a mug with your logo printed on it).
If you have paid for your own hotel accommodation, the company can pay you back without HMRC considering it a taxable benefit as long as the stay was for business OR you were staying at a temporary workplace. If you are staying near your permanent workplace and have paid for this yourself, the company can’t pay you back. If they do, this will be considered a taxable benefit which you will need to pay tax and NI on.
Any insurance the company has for business is allowable for tax relief. Medical insurance for employees can be bought by the company, however it may have to pay some extra NI costs,
Some medical treatments can be paid for by the company without HMRC considering it a taxable benefit. Contact us for more details.
As an employer, you have certain tax, National Insurance and reporting obligations if you cover the costs of your employees using their own vehicles for business travel.
There are 2 separate schemes used to deal with these mileage expenses - one for tax and one for National Insurance. To learn more, read the rules here.
The director of a limited company cannot claim on mortgages, as they’d be paying this anyway – it is a fixed cost.
If you are provided with a mobile phone from the company, then the contract must be in the company’s name.
When the company makes contributions to its own pension scheme for employees, it can claim tax relief on the cost of these contributions in its accounts.
You can claim tax relief on the full cost of professional fees, however there are some rules. Some professional fees are considered capital in nature, e.g if related to the purchase of a capital item..
Parking fines & speeding tickets are not allowable for tax relief, even if traveling on business..
The director of a limited company cannot claim on rent, as they’d be paying this anyway – it is a fixed cost.
If the company pays for a subscription, it has to come from a professional body which is on HMRC’s list here. If the body is not on HMRC’s list, the subscription is considered a taxable benefit.
The director of a limited company cannot claim on property repairs, as they’d be paying this anyway – it is a fixed cost. .
If you are the only staff member and are working from home, you can claim from the company the total cost of the business use of your telephone using an itemised bill, and a percentage of the line rental. If you are not the only staff member, then things get a little tricky, so phone us for advice.
If your business telephone is in the company office, you can claim tax relief on the full cost of the bill. Make sure that the company pays the telephone company directly and that the contract is in the company’s name.
The company can pay you back for any stationery that you buy, that is used for business. The company can also claim tax relief on the full cost in their accounts.
If the purpose of the training is only for business, then the company can claim tax relief on the full cost.
If you have paid for your own train ticket, the company can pay you back without HMRC considering it a taxable benefit as long as the journey is between business appointments OR you were traveling from a temporary workplace. If you travel from your home to a permanent workplace, the company cannot pay you back since it doesn’t count as business travel.
You can claim back from the company the full cost of tolls and car parking if traveling on business. The company can claim tax relief on this in their accounts.
Tolls and car parking
You can usually claim tax relief on the development and maintenance costs of the website.
Every individual circumstance is different and this information is for general advice and should not be relied upon without discussion with a suitably qualified professional.
If the vehicle is in the company name, the company can claim tax relief on all of the costs of running the vehicle, however this would be considered a taxable benefit to the user of the vehicle and would be liable to tax and NI payments. Alternatively, you can use your own car and claim business mileage from the company at HMRC's approved rates