It can be a bit of a minefield trying to figure out what you can and can’t legitimately claim as a business expense. For instance, if you’re buying a new laptop, can you claim for that?
The truth, at ClearSky, is that we know it’s perfectly legitimate to claim for hardware plus we have the know-how to help you identify what you’re entitled to claim for.
Here’s an idea of some of the items you can claim expenses for:
Some general rules on expense claims:
- All claims for expenses should be incurred wholly, exclusively and necessarily in performing your business duties
- You should not claim any travel and subsistence expenses for any one place you have worked, or know you will work, for more than two years (the 24 month rule)
- Receipts for all expenses should be kept for a minimum of six years to provide evidence of expense claims in case of HMRC investigation
From April 6th 2016 the government have brought in new legislation that means that certain business expenses may not be payable if the current assignment you are working on is under IR35. This can change from assignment to assignment. These expenses include;
- Business mileage
- Food and drink (subsistence)
Business mileage (use of your personal car)
If the assignment your working on is outside of IR35 you can currently claim 45p per mile for the first 10,000 business miles you do in your car each year and then 25p per mile after that. This mileage includes travelling to and from temporary locations and between different sites. Of course, you need to get valid VAT receipts for fuel and these must be kept to support your claim. You can record details of the business journeys undertaken on our online portal.
While working at a temporary location, you can claim any reasonable meal and drink costs supported by valid receipts. So if you buy a sandwich and coffee for lunch, keep the receipts.
There are several categories for submitting accommodation costs;
- All accommodation (hotels and B&Bs) must be accompanied by an original receipt
- If you’re claiming accommodation rental costs, your rental agreement must be the original (in the name of the business), signed copy and meet HMRC Dual Purpose rules, which means that you are already maintaining a property and are renting a second property for the purpose of your contract
Parking can be claimed as long as an original receipt detailing the date and cost is available for each amount claimed.
Rail, bus, taxi and air travel
Fare costs to and from your home and temporary place of work can be claimed where receipts are provided. For low cost flights, both original tickets and online receipts are acceptable.
Associated travel costs
Road and bridge tolls, tunnel fares and congestion charges incurred while on business may be claimed. Original receipts are required for all items except toll fees. Speeding, parking or clamping fines cannot be claimed.
Training and tuition
Any training or tuition to do with your current trade can be claimed. Training is treated like any other deductible business expense; it must be ‘wholly, exclusively and necessarily’ in the performance of duties and related to income. If the training is not linked to existing income, then it cannot be treated as a deductible expense through your limited company.
Manuals and text books
A reasonable amount may be claimed for the cost of manuals and text books required for business purposes - receipts required.
An eye test may be claimed as long as a receipt is provided. The cost of spectacles may be claimed if they are prescribed for VDU use only. This will need to be confirmed on the receipt from the optician.
If you need special clothing for your assignment, such as personal protective equipment (PPE), this can also be claimed for on expenses.
Computers and other office equipment
The costs of hardware, software and other office equipment essential to your business can be claimed.
Anything you need to post to us here at ClearSky or any business related post can be claimed for, again original receipts must be provided.
Office consumables and stationery
Any office consumables (printer ink, pens etc) and stationery you use for business may be claimed. This total cost must be for a reasonable amount and you’ll need original receipts to validate your claim.
Telephone and broadband packages
Because communication is essential for your business, you can claim for the cost of setting up home phone and broadband packages – as long as the contracts are registered to your company. You can also claim for any business calls you make on your landline.
Costs of advertising your business is an allowable expense, so for example online search engine listings or telephone directories.
Being a parent as well as a contractor can be challenging, but there are ways of alleviating some of the pressures in which this brings along. As of 2018, the Government has introduced a new childcare scheme, designed to support the costs associated with childcare. The Tax-Free Childcare (TFC) scheme intends to replace the childcare voucher system (which is now closed to new applicants).
Whilst operating as a limited company, TFC is the best way of claiming relief for childcare costs. You are entitled to up to £500 every three months, for each of your children. If you are eligible to receive TFC, the Government will pay 20p for every 80p you pay for an approved childminder, who is also signed up to the scheme.
You could claim for the cost of a bicycle through the “cycle to work” scheme. You may even be able to claim a mileage expense for the journeys to a temporary workplace.
Donations made to a registered, HMRC approved, charity are allowable.
Read our charitable giving guide for more information.
Use of home as office expenses
A fixed rate of £4 a week is deemed as an acceptable flat rate claim for general costs associated with the use of an office in the home, and no detailed expense claim need be prepared to justify such an amount. Claim amounts above this may be able to be made – however should be supported by sufficient evidence. Please contact your Personal Accountant for further details.
Pension contributions made by an employer on behalf of its employees are an allowable expense.
The cost of an annual staff function can be claimed through your company. This should be supported by receipts and it is important that the receipts for this expense do not exceed £150 per employee.
Read our staff party guide for more information.
You can save tax by paying for some life insurance policies through your limited company.
Tools, equipment and uniform
If you require any special tools or a uniform to carry out your job, you should be able to claim tax relief on these items through your limited company. If you work in the construction industry, our sister company Brian Alfred can provide all of the insight and support you need when it comes to claiming tax back.
Need more help?
We hope this guide has given you an insight into the types of business expenses you can claim as a limited company – and there are many more. If you’d like further information, help is close at hand.
If you need any further information please don’t hesitate to get in touch with your personal accountant or if you are thinking of joining ClearSky please call 0800 032 5326 or email firstname.lastname@example.org.