Sep 20•Written By Heaton Vences

What Expenses Can I Claim in My Limited Company?

What Expenses Can I Claim in My Limited Company?

Running a limited company comes with many benefits, but it also requires careful financial management. One of the key ways to optimise your company’s finances is by understanding which expenses you can claim to reduce your corporation tax bill. Knowing what expenses can I claim will help you save money while ensuring you stay compliant with HMRC’s rules. In this guide, we’ll break down what you need to know about claiming expenses as a limited company director.

What Is a Business Expense?

A business expense is any cost that your company incurs while carrying out its trade. These expenses must be wholly and exclusively for the purpose of your business. That means if you’re spending money on something that’s used partly for personal reasons, you may not be able to claim the full amount—or any amount at all.

Some typical business expenses include:

  • Office rent and utilities
  • Employee wages and salaries
  • Professional services (accountants, solicitors)
  • Office supplies and equipment

What Is the Difference Between a Business Expense and a Capital Allowance?

While both business expenses and capital allowances can help reduce your company’s taxable profit, they are treated differently for tax purposes.

  • Business expenses: These are ongoing operational costs that can be deducted from your taxable profit in the year they are incurred.
  • Capital allowances: These apply to more significant purchases that are considered investments, like buying a new computer, machinery, or a vehicle. Instead of claiming the full cost as an expense in the year of purchase, you claim a portion of it over several years, reflecting the asset’s depreciation.

It’s crucial to distinguish between the two because misclassifying them can lead to issues with HMRC.

Common Things Business Owners Can Claim For

As a limited company, you can claim various expenses. Here are some common ones:

  1. Office Expenses: This includes rent, utilities, office furniture, and supplies.
  2. Travel Expenses: If you travel for business, you can claim transport, accommodation, and meals during work trips.
  3. Salaries: Wages for employees and yourself, including National Insurance Contributions (NICs), can be claimed.
  4. Professional Fees: Legal and accounting fees related to running your business are allowable expenses.
  5. Marketing and Advertising: This includes costs associated with promoting your business, such as website hosting, social media ads, and print media.
  6. Training and Development: If you or your employees need to improve skills relevant to the business, the cost of training courses can be claimed.
  7. Software and Subscriptions: Business-related software, cloud storage, and professional memberships are deductible expenses.
  8. Pensions: Employer contributions to pensions for employees and directors are tax-deductible.

Important Things to Remember When Claiming a Business Expense

  1. Keep accurate records: HMRC expects you to maintain detailed records and receipts for all business expenses. Digital copies are acceptable but make sure they’re well-organised.
  2. Separate personal and business expenses: If an expense is partially for personal use, you can only claim the portion that is for business use.
  3. Home Office Expenses: If you work from home, you can claim a portion of your household expenses (e.g., heating, electricity, and internet), but these must be appropriately calculated.
  4. Mileage vs. Vehicle Expenses: If you use your personal vehicle for business purposes, you can claim mileage at HMRC-approved rates. However, if the vehicle is owned by the company, you can claim running costs like fuel and insurance.

Always Consult with Your Accountant

While it’s essential to know what you can claim as a limited company, it’s equally important to consult with a professional. Your accountant can ensure that your claims are accurate and compliant with the latest tax regulations, helping you avoid fines or penalties from HMRC.

Unsure What You Can Claim as a Limited Company? Get in Touch

Navigating the world of business expenses can be complex, and making a mistake could cost you. If you’re unsure what expenses you can claim, feel free to get in touch for expert advice. Our team can guide you through the process and ensure your company stays tax-efficient while compliant with all relevant regulations. 

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