A Guide to Business Expenses for Owner-Managed Limited Companies

21st May 2023 | Tax

As a limited company, understanding the full range of business expenses you can claim is essential for optimising your tax relief and maximising your company's financial efficiency. By identifying and accurately documenting eligible expenses, you can significantly reduce your taxable income, resulting in lower Corporation Tax payments. In this blog post, we will explore a comprehensive list of deductible business expenses that can help you make the most of your tax relief. At ARK Accountants, we are committed to providing you with valuable insights to navigate the complexities of taxation and financial management.

Travel and Subsistence Expenses:

• Business mileage: You can claim for mileage when using your personal vehicle for business-related travel. The current rates are 45p per mile for the first 10,000 miles and 25p per mile thereafter.
• Public transport fares: Expenses incurred for bus, train, air, and taxi fares directly related to business travel can be claimed.
• Accommodation: If you need to stay overnight for business purposes, the cost of hotel accommodations is eligible for tax relief.
• Meals and incidental expenses: Reasonable costs of meals and incidental expenses while traveling for business can be claimed. Overnight stays may have specific rules for meal allowances.

Office and Equipment Expenses:

• Office supplies: Expenses for essential office supplies such as stationery, printer ink, paper, and postage can be claimed.
• Computer equipment: The cost of computers, laptops, printers, scanners, and other office technology used primarily for business purposes can be claimed.
• Furniture and fixtures: Expenses for office furniture, including desks, chairs, filing cabinets, and shelves, can be claimed.
• Broadband and telephone: The cost of business-related broadband and telephone services can be claimed. If used for both personal and business purposes, only the portion used for business is eligible.

Professional Services:

• Accountancy fees: Fees paid to professional accountants, like ARK Accountants, for managing your company's accounts and tax affairs are deductible.
• Legal fees: Expenses related to legal advice and services directly linked to your company's activities can be claimed.
• Consultancy fees: Costs incurred for specialist consultancy services that contribute to the development or improvement of your business are deductible.

Training and Professional Development:

• Training courses: Expenses for training programs, workshops, seminars, and conferences that enhance your professional skills and knowledge are eligible for tax relief.
• Professional memberships: Membership fees for industry-related professional bodies or organisations can be claimed.
• Continuing professional development: Costs associated with maintaining and updating professional qualifications are deductible.

Marketing and Advertising Expenses:

• Website development and maintenance: Expenses related to the creation, hosting, and upkeep of your business website can be claimed.
• Advertising costs: Expenses for online ads, print materials, promotional campaigns, social media marketing, and other advertising activities are eligible.
• Marketing consultancy: Fees paid to marketing consultants or agencies for strategic advice or campaign management can be claimed.

Insurance and Legal Costs:

• Insurance premiums: Expenses for business-related insurance policies, including public liability, professional indemnity, employer's liability, and business interruption insurance, are deductible.
• Legal costs: Fees incurred for legal advice, contract drafting, and other legal services directly related to your business activities can be claimed.

Business Entertaining and Events:

• Annual parties and events: Expenses for annual staff parties or events, such as Christmas parties, can be claimed as long as the cost per head, including VAT, does not exceed £150. The event should primarily benefit employees.

Home Office Expenses:

• Use of home as office: If you work from home, you can claim a portion of your household expenses, such as rent, mortgage interest, council tax, utilities, and internet, based on the proportion of your home used for business purposes.

Conclusion:

As an owner-managed limited company, taking advantage of all eligible business expenses can significantly impact your bottom line. By thoroughly understanding the scope of deductible expenses and keeping accurate records, you can optimise your tax relief and improve your company's financial health. However, it is important to consult with a qualified accountant, such as ARK Accountants, to ensure compliance with HMRC regulations and to receive personalised advice tailored to your specific circumstances. Make the most of your business expenses and maximise your tax relief with expert guidance from ARK Accountants.

Disclaimer: This blog post is intended for informational purposes only and should not be considered as professional tax or financial advice. Consult with a qualified accountant or tax professional for personalised guidance regarding your specific circumstances.