What Expenses Can I Claim Through My Limited Company? - Ad Valorem

Running a limited company in the UK comes with certain tax advantages, including the ability to claim various expenses as legitimate deductions, which can help reduce your overall tax liability. However, it’s essential to understand which expenses are eligible and compliant with HM Revenue and Customs (HMRC) guidelines. You can only claim for the expenses you incur wholly and exclusively during the everyday running of your business. In this article, we’ll explore some common expenses you can claim through your UK limited company.

Office Expenses: Costs associated with running and maintaining your office, such as rent, utilities, business rates, and office supplies, are generally deductible. If you work from home, you can also claim a portion of your household bills based on the proportion of your home used for business. 

Mobile Phones and Internet: If you use a mobile phone or internet connection for business purposes, you can claim these expenses as tax-deductible. However, you must be able to demonstrate that they are used primarily for business, and personal usage should be reasonable.

Private Health Insurance: Company-paid private health insurance for you and your employees is typically tax-deductible. It’s a valuable employee benefit that can attract and retain talent while providing peace of mind for your team.

Life Insurance: Life insurance premiums for employees can also be claimed as an allowable expense. This benefit can provide financial security to your employees’ families in case of unforeseen events.

Entertainment: While business entertainment expenses can be claimed, there are specific rules and limits. You can deduct expenses for entertaining clients or potential customers, but it must be directly related to your business. Remember that extravagant or non-business-related expenses won’t pass muster with HMRC.

Travel and Accommodation: Expenses incurred during business travel, including accommodation, meals, and transportation, are generally deductible. Be sure to keep records of your expenses, including receipts and invoices.

Professional Fees: Fees paid to accountants, solicitors, or other professional advisors for services related to your business are deductible. These professionals can also help ensure you’re compliant with HMRC regulations.

Marketing and Advertising: Expenses for marketing your business, such as website development, advertising campaigns, and promotional materials, can be claimed as deductions. These investments are vital for business growth.

Training and Education: Costs associated with training and improving your skills or those of your employees can be deducted. This includes courses, seminars, and workshops directly related to your business activities. It’s important to note that training and education does need to be related to your trade and should improve a skill or specialism.

Pension Contributions: If you have a pension scheme for you and your employees, contributions to this scheme are typically tax-deductible. This not only benefits your employees but also provides tax advantages for your business.

It’s crucial to maintain accurate records of all expenses and ensure they are genuine business expenses. HMRC may request evidence to support your claims, so keeping well-organized records is essential. Additionally, it’s advisable to seek advice from a qualified accountant or tax professional to ensure compliance with ever-changing tax laws and regulations. Examples of areas which have particularly specific rules are expenses which have a dual purpose (business and personal), expenses arising from contracts not in the company’s name, staff entertainment and gifts. Expenses that employees can claim from the company are also subject to specific guidelines and advice from an accountant is recommended. The golden rule when claiming expenses through your limited company is speak with an accountant to check whether it is eligible.

In conclusion, as an owner of a limited company, you have the opportunity to claim various expenses to reduce your taxable income. By understanding which expenses are eligible and adhering to HMRC guidelines, you can maximise your tax efficiency while running your business smoothly. Always consult with a tax professional for personalised advice tailored to your specific circumstances.