What Expenses can I Claim as a Limited Company Contractor? - Part 1
Published on Wednesday, February 4, 2015
You are self-employed and running your own limited company, but are you aware of the expenses are you are able to claim in order to increase your tax savings?
As a contractor in this day and age you are more than likely to require the internet at some point. Handily, the cost of broadband used for business purposes is a fully deductible expense for a contractor.
If you are working from home and have a residential contract, you will be required to demonstrate the separate use for both personal and business usage, in order to claim tax relief on your total bill.
This deductible expense applies only when the broadband is registered in the name of your limited company, and is paid from the corresponding business bank account.
Do you have to put your children into childcare facilities whilst you complete your work as a contractor? As a director of a limited company, you are able to claim a percentage of the costs of childcare as an expense to your company. This is done through the Government’s Childcare Voucher Scheme, where you can claim a maximum of £55 per week or £243 per month towards your childcare costs.
Please read our ‘In the Know’ blog for further information on how the scheme can work for you.
Computer Equipment and Software
Any computer hardware or software can be put through your limited company as a regular company expense.
If the total cost of an item is over £1,000, then this will be treated as a capital item rather than a regular expense. You can still claim tax relief for these items, however they are treated slightly differently.
Saving for the future is a big priority for many. Luckily, pension contributions are also defined as an expense to your limited company.
Putting aside part of your gross income on a regular basis will result in you making a saving on your corporation tax as well as an indirect saving on your higher rate tax if you fall into that earnings threshold.
You are able to set aside up to £40,000 in contributions in the financial year (14/15).
One of the most common and popular expenses that limited company contractors claim for, is the costs involved in order to get to and from their place of work. There are a few options in which you can claim tax relief on these expenses;
- When using a personal vehicle for business travel purposes – you can claim the travel for this through the miles incurred getting to and from your workplace. (Please read our ‘In the Know’ blog for further information on claiming mileage)
- You also have the advantage of claiming for the ad hoc costs of using a personal vehicle, such as parking tickets in car parks, congestion expenses and toll charges. You cannot however claim for parking fines and tickets received so be careful!
- When using public transport – you can claim tax relief on travel expenses incurred whilst using trains, buses, air travel and taxis in order to undertake the work you are contracted for.
*Please note all of the above travel expenses mentioned above have to comply with the 24 month rule. Please read our ‘In the Know’ blog on this subject for further details.
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