Here, we bring you part two of our Top 10 expenses a contractor can claim through their limited company.
If you are lucky enough to be able to conduct your work as a contractor from the comfort of your own home, then you’ll be pleased to know that you can claim tax relief on certain costs incurred whilst doing so.
If the majority of your working time is spent at home, you are able to claim a percentage of gas and electricity bills, metered water costs and the cost of business phone bills when using a residential telephone line. Alternatively, another method is to claim a flat £4 per week towards these bills, which can be found in the HMRC’s guidance to expense claims.
Read our In the Know blog for further information on claiming home office costs as a contractor.
Training course fees are an allowable expense to claim tax relief upon, as long as they are relevant to your line of work and business and are extending your current knowledge.
If the training is to learn a completely new skill rather than to enhance an existing one, then it will be treated as a capital expense. In this instance, it is not allowable for tax relief.
The cost of training books and manuals are also allowable expenses, providing they are necessary to complete the training. This expense should be paid from the company’s bank account and be receipted for in your limited company’s name.
As long as it does not exceed the 24 month rule as a ‘temporary workplace’, limited company contractors are able to claim tax relief on the cost of business associated accommodation costs incurred. This includes both hotels, B&B’s, as well as rented accommodation.
If you are staying in a hotel or B&B, you can also claim for the cost of breakfast and dinner. If you decide it is more beneficial to stay in rental accommodation, you must ensure the contract is in your limited company’s name in order to claim tax relief. The amount you are able to claim for reflects the amount of working days you complete. If you work 5 days out of a 7 day week, and have access to the rented accommodation for the remaining two for personal use, we recommend you claim 5/7th’s of the cost of renting the property.
Annual Work Event
You can claim the cost of holding an annual event as an expense to your limited company. There are three small conditions;
1. It is an annual event
2. The event is open to all employees within the company
3. The cost per head does not exceed £150 (including VAT)
The event does not necessarily have to take place around the Christmas period as many assume. As long as the event is an annual one, e.g. summer employee BBQ, it is claimable.
Read our ‘In the Know’ blog for further information on this limited company expense.
The last contractor expense we wish to share with you is accountancy fees. Believe it or not, the cost incurred to have an accountant keep your books up to date and records in order, is a legitimate expense to your limited company.
For instance, if you were to engage with Churchill Knight to act as your limited company accountant, our monthly fee instalment could be listed as a monthly expense.
It is worth noting however, that only accountancy fees associated with your company are claimable. Costs incurred for personal tax affairs are exempt, due to the fact that your limited company is a separate entity to yourself as a director.
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