If you are a contractor who just incorporated a Ltd company or already running one, then you can claim a whole range of business-related expenses from your company. All genuine business expenses help reduce your company’s corporation tax by 19%. So here are the top 10 expenses you can claim –
- Car Mileage – If you use your own personal car to and from the workplace, then you can claim 45p for the first 10,000 miles and 25p thereafter in a tax year i.e 06 April to 05 April. This claim should cover all fuel and other running costs.
- Traveling Expenses – If you pay personally for travel tickets when you use trains, tubes, buses, taxis, flights to and from the workplace, then you can claim the costs from your company account. You can also pay for the business-related trips directly from your company account. Parking and congestion charges can also be claimed but parking fines and speeding charges are not allowed.
- Meals – You can claim meal costs during work. If you pay for these costs from your personal account then can either claim the actual amount spent on meals OR you can use HMRC’s daily subsistence rates. (A) 5 hours or more qualifying travel = £5 (B) 10 hours or more qualifying travel = £10 (C) 15 hours or more qualifying travel = £25 (D) If A or B are claimed then additional £10 may be claimed if the journey lasts beyond 8 pm. Please note that there is a maximum total claimable per day of £25
- Accommodation – If you need to stay away from home for the purpose of your contract then you can claim full rent or bill from the company account. Instead of paying the rent personally you can pay them directly from your company bank account.
- Use of Home as an office – You can claim a flat rate of £18 per month for use of home as an office. However, if you work 2-3 days from home and have a dedicated office room then you may be able to claim more than the above amount.
- Telephone Expenses – If you pay personally for your mobile bill then you can claim only the business calls made. However, if you get a mobile contract between your company and the service provider then you can claim the whole bill.
- Training Costs – As an IT professional you need to update your skills whenever there is a change in technology and that requires numerous training and certifications. If you incur any training that is related to your current contract then you can claim the full costs on training.
- Sub-Contractor Fee – Sometimes you may need help from another IT professional in order to perform and complete your contract. If that is the case then you can claim fees paid to sub-contractors.
- Hardware & Software Costs– If you buy a laptop or computer that is necessary for you to do your work then you claim the full cost from your company account. You can also purchase a laptop/computer and software directly from the company bank account.
- Child Care Costs – At present, you can pay child care costs directly to a registered child care provider from your company account. The maximum is £243 pm for a basic rate taxpayer and £124 pm for a higher rate taxpayer. From October 2018 onwards a new tax-free childcare scheme is open for new applicants.
Three good points to REMEMBER –
- Any business related expenses claimed must be incurred wholly, exclusively and necessarily in the course of carrying out your contract duties.
- You must have sufficient receipts or proof when you make a claim.
- All receipts/proofs must be kept for at least 6 years, you must be able to produce these evidence in case of an HMRC investigation.
Please note that traveling & subsistence must not be claimed if you work in the same location for more than 24 months. Even if you anticipate that your contract will exceed 24 months, you must stop claiming.
The above list summarises the most common expenses that a contractor can claim from his/her Ltd company. If you would like to discuss more on the above topic then, please feel free to drop me an email to email@example.com