When a limited company forms, there are many different expenditures which need to be paid. The total cost which is paid every month can be very high and can damage profit margins. However, there are some expenses which can be claimed for and are permitted by HMRC (Her Majesty’s Revenue and Customs).
The expenses which HMRC allow you to claim
It doesn’t matter whether a limited company has ten employees or hundreds because the same rules in regards to expenses apply to all. The expenses which a limited company claims must be ones which are related to the business. Determining what can and cannot be used in the day-to-day running of a business might be tricky, especially if many receipts for certain purchases or services are provided to an accounts department in order to claim back money. Here are some of the many expenses which a limited company can legitimately claim for:
Generally speaking, any journey which is necessary for a business to do their job can be claimed for. Travelling to a temporary workplace is one such expense which can be claimed because money has been spent in order to get there. A temporary workplace is classified as being a location where you perform a task for a short period of time although it can be worked in for up to twenty four months.
Such acceptable examples of other travel expenses include purchasing a ticket for a train and plane journey, purchasing lunch at a temporary workplace and parking charges. When travelling by car, expenses can be claimed on the petrol which was used. For the first 10,000 miles, a set figure can be claimed when travelling in a car, motorbike, van and bicycle. Once you have travelled more than 10,000 miles, another figure is applied but it only changes when travelling by car.
Although the cost of an office party for employees and other forms of entertainment cannot be claimed, other entertainment expenses can be claimed under certain conditions. If a party is being organised where customers or potential clients are present, this is one such situation where expenses will be accepted by HMRC.
The IT equipment which a limited company uses can also be claimed. For example, if a limited company needs to purchase several laptops for their employees who will complete work when they visit a customer’s property, this is deemed as an acceptable expense. Likewise with other office equipment as well such as a printer, fax machine etc. – as long as it will be used by a limited company to complete work, it can be claimed as an expense. If an internet connection is not for personal use and will only be utilised by a limited company to complete work, its costs can also be claimed.
As a limited company may frequently contact their clients who are thousands of miles away, the total sum of money which is spent on telephone calls can be considerable. Only business calls can be claimed as well as the cost of purchasing mobile phones which are used solely for making business calls. At no point can a limited company claim for the purchase of a mobile phone which is for personal use. The monthly bill for a mobile phone which is used for making business calls can only be claimed as well.
The cost of employees attending training courses can also be claimed as well because staff are learning skills which benefit a limited company. Even eye tests can be claimed if employees need to have a good degree of vision in order to operate machinery on a daily basis.
By knowing each and every business expense which can be claimed will enable limited companies to be aware about thousands of pounds which they might otherwise have been taxed on.