What expenses can I put though a limited company?
This is a question we get asked a lot from our clients!
The key thing here is if you are buying things personally you will have already paid tax and
national insurance on this so you may have already given up 8.75%, 33.25%, 33.75%, 43.25% or
even 60% of the money in tax- so we here at Gravitate Accounting we think it’s important that
you take advantage of putting certain expenses through your business to save some cash!
Mileage is an expense that you can claim if you are frequently travelling to clients, travelling to
meet candidates, networking, or training events. Mileage can be reclaimed at £0.45 per mile up
to 10,000 miles per year, then £0.25 still reclaimable on every mile above 10,000. There is also
another perk to claiming mileage in that you can also claim an element of VAT back off each
claim too. If you or your employees ever need to use a taxi, bus, or train to work or to get to a
client you can also claim this back through the business too.
Sam’s thoughts ‘ Mileage is easy to forget as there is no expense that physically hits your
bank for it. One easy way to track mileage is using Pleo �� it’s great for tracking mileage
and giving employees and directors access to an expense card on the go at the same
Work from Home Allowance
You can also claim a “Work from Home” allowance of £312 per year (£6 per week). As well as
the allowance, any laptops, equipment or furniture that you buy for your home office or work can
also be put through the business as an allowable expense and if you do buy them through the
business, you will also see the additional corporation tax relief. HMRC is currently running a
scheme where any office equipment, computer equipment, desks and chairs can be reclaimed at
the end of the year at 130%- which means that you get an additional benefit from those
purchases and a bonus reduction in company tax.
Sam’s thoughts ‘ The work from home allowance is a simple method of calculating the
cost of working from home- there is also an option to calculate the cost of a home office
which involves calculating your bills on a pro rata basis.‘
Travel and entertaining costs
Travel and entertaining costs can also be claimed through your business for taking both your
clients and your employees out for occasions. Staff entertaining is allowed up to £150 per person
per year and includes both directors and employees, this can be used for a summer barbeque or
party or put towards your Christmas do!
Client entertaining can also go through the business. It is important to note that although you can
claim this through your business as an expense you will not be able to claim any corporation tax
relief at the end of the year- however, this is still much more tax efficient then if you are paying
for this personally after your own personal taxes.
Sam’s thoughts ‘Retaining the best staff is hard so offering events is a nice perk, we also
do team building events / team training sessions which don’t make up part of the £150
Trivial benefits- £50 gifts
Employers can also provide 6 x £50 vouchers themselves (and unlimited to staff but to avoid
investigation may be best sticking to 6) throughout the year tax free as gifts, so long as they
aren’t given in lieu of payment or work.
Sam’s thoughts ‘What I do personally on this is reward myself at the end of each quarter
with a £50 gift for submitting our VAT returns, then one on my birthday and one at
Investing money into your employees can also be a great way to help you save on corporation
tax too- allowable expenses include gym memberships and welfare costs, rewards schemes for a
job well done (such as; Kudos), training costs and the cycle to work scheme. Although it is worth
noting that there could be a small amount of payroll taxes to pay if you offer specific individual
benefits to employees (such as; medical procedures, insurances or company cars) these costs
will still help reduce what you pay in corporation tax at the end of the year.
Mobile phone costs are another expense that you can put through the business- so long as the
company is being billed for the costs. When the company is being billed you can then claim
100% of the cost and the VAT, compared to if you have a personal mobile phone contract where
you can only reclaim an element of the cost back.
Sam’s thoughts ‘The key here is being invoiced in the company name, it is worth noting at
times you can pay a premium for putting through the business so important to consider
Insurance is another allowable expense that you can put through the business- including
business car insurance, public indemnity insurance, public liability insurance, damage cover for
assets, medical insurance, building insurance. If you are currently paying any of the above
personally, you are missing out on additional corporation tax and national insurance relief. Some
insurances such as Private Medical Insurance will need to be reported through payroll at the end
of the year, but the savings are considerable compared to what you would pay in taxes
Sam’s thoughts ‘I currently have 3 insurances through the business and is a bit of a
minefield – if you want to discuss this in more detail I will happily introduce you to our
insurance guys who are great’
You can also enrol themselves onto a payroll scheme for the year and take a wage from the
business, as well as being able to put up to £40,000 a year into a company pension scheme-
when you compare this to making a personal contribution this size into a personal pension
scheme is a saving of £7,600 in corporation tax relief.
Sam’s thoughts ‘Again this is a simple overview of pensions but due to the significant
amounts you can invest it does provide great opportunities- if you have surplus cash in
your business definitely one to look into’
Electric & Hybrid cars
The purchase of company cars is also a great way to save more tax- especially if you’re planning
on purchasing an electric or hybrid vehicle. Compared to petrol or diesel cars- the savings in
payroll taxes hybrid and electric vehicles result in you paying less tax as there’s less emissions
from the cars and there is also the bonus addition of relief to corporation tax too. If you need to
purchase charge points for your place of work, these are also allowable costs too. Car lease
costs are also allowable business costs and can be put through the business and half of the VAT
can be reclaimed.
Sam’s thoughts ‘If you are willing to go Electric then the tax savings are significant- if you
are looking at Hybrid the emissions % is based on the number of electric miles so try and
find one that does over 40’
There are many ways you can claim back expenses through your business, but the above are our
favourites and effective ways to save money. If you have any questions on the above or want a chat
with a member of the team to discuss how you can be more tax efficient, please get in touch here.
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