Business Expenses

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Expenses incurred ‘wholly and exclusively’ for the purpose of trade of your company are called ‘business expenses’

Such money can be claimed from the company and added to the end of year accounts. Below are the most common examples.

 

 

Business Travel

If you incur expenses travelling to client sites, appointments, meetings in order to fulfill your contractual obligations, the costs of doing so may be claimed from the company. This must be to a “temporary workplace”, the ordinary every day commute to work does not count. The most frequent claims for travel expenses are for public transport tickets, flights, taxis. The cost of fuel in case you are using your own car for commuting to a temporary work place may also be claimed. There is a set mileage allowance for that, as well as allowance to cover the cost of insurance, depreciation & other.

Accommodation

If it is necessary to stay away from home for business purposes, any costs incurred can be claimed from the company and will be deductible for corporation tax purposes. This involves accommodation when staying away or too far from the city of your permanent residence. The accommodation type can vary from the hotel or guest-house to rented furnished flat. There is no specific limit on the costs. It is important to clarify that family is not allowed to accompany the employee.

Subsistence

When working at the temporary workplace, cost of lunch may be claimed from the company. This has to be in a form of pre-packed lunch, simply buying the products to prepare a meal will not qualify. When staying away overnight the cost of breakfast and dinner may be claimed, there is a flat rate allowance to cover small incidental personal expenses too (newspapers, laundry etc.)

Home-Office

There is a possibility to claim an allowance if you are using your home or part of the home as an office to work or run your business. There is a flat rate is £216 PA.

Accounting Fees

Accountancy fees also meet the criteria of being wholly and exclusively a business expense, so the costs of financial statement preparation and tax returns payable to your accountant can be claimed. This however excludes your personal tax returns and self assessment.

Phone Costs

A land-line rental in your office of course is a business expense, however one mobile phone per employee is also allowed. The phone has to be purchased by the company, directly through the companies bank account and the contract also has to be between the mobile provider and the company (the company name should therefore appear on all phone bills).

Internet Connection

You may claim the cost of internet connection at your home if you meet the following requirements. The contract is in the company’s’ name and payments are made directly through company’s bank account, the connection provider is the same and the billing is joint. Private usage must not be significant.

Training Costs

Costs associated with updating or enhancing an existing skill can be treated as a company expense. There should be an expectation for the skills or personal qualities improved through training to be useful in the performance of employee’s duties. If the purpose of attending training is to acquire a completely new skill, the cost can be treated as capital expenditure. Travelling, accommodation and other expenses related to the training will also be allowable.

Entertainment

If you incur costs entertaining a potential client with the intention of winning a particular contract or extending a current contract, such money can be claimed from the company. However, expenses of this nature can not be deducted for corporation tax. There is no fixed amount for entertainment costs, although they of course should be reasonable.

Annual Event

An annual event is allowable expense for the company and is treated as a tax free benefit. There are few requirements: The total cost must not exceed £150 per head; if there is an option of inviting a partner, it must be allowable to all staff. (£150 per head) You may have more than one annual event per year, but this must not exceed given allowance when added. All events must be genuine (Christmas party, summer ball etc.)

Childcare Costs

If company agrees to provide childcare for you, you may claim it in a form of Direct agreement (between the company and childcare provider); Voucher scheme, Allowance. The child must live with you, be under 16 years old, the carer must not be related to your child. Click on text for more info.

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