Allowable expenses for small businesses
Posted on 12th April 2019 at 14:01
As the owner of a limited company you can receive tax relief on money you spend running your business. Known as allowable expenses, if you claim them correctly, you can probably increase your take-home pay.
Here are some of the most common expenses you can claim.
Advertising, marketing and PR
Promoting your business is a valid expense so you can claim one-off costs or ongoing fees that support your business.
If your business takes you away from home overnight, you can claim the cost of accommodation. Food can also be claimed if you’re away from your normal place of work, and a ‘reasonable’ amount of alcohol (probably a single drink) with your dinner.
If you travel for business by public transport you can claim your fare. If you travel by car you are allowed 45p per mile for the first 10,000 miles, and then 25p per mile. Parking costs, toll fees and congestion charges are also allowable expenses.
When traveling by motorcycle the rate is 24p per mile. If you use a bicycle it’s 20p per mile.
Working from home
Some of your household costs and utility bills can be claimed as expenses if you work at home. You can simply claim £4 per week or £208 per year and you won’t need any receipts.
Another approach is to work out the proportion of your overall household costs that are for business purposes. To do this you will need to identify the number of rooms in your property that are used for business, and the percentage of time that those rooms are used for your work.
Your telephone bill
If you register your mobile phone contract in your company name and use it solely for business, you can claim the cost as a business expense. If you use a ‘pay as you go’ phone for work, your top-ups can be claimed as long as you have receipts.
To claim for use of your personal mobile phone for work, you will need to separate out the calls and texts that are for business.
You can also claim for business calls made from your home phone and part of your line rental if you can show them on an itemised account.
Childcare costs aren’t considered as a cost directly related to running your business, so you can’t claim them as an expense. You can continue to claim childcare vouchers from your pre-tax income, if you’re already registered, although the scheme ended in October 2018. If you register for the Government’s tax-free childcare scheme you will receive a 20p top-up for every 80p you pay for childcare each quarter, up to a maximum of £2,000 per year.
Professional fees such as accountancy and legal costs can be claimed, as long as they are exclusively for the running of your business.
Pension contributions are classed as a personal allowance. As a company owner, you could pay less corporation tax if you use an HMRC approved pension scheme.
Training that improves your understanding and skills to run your business can be claimed as a business expense. Some training might not meet this requirement, so it’s always worth checking.
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