Company Expenses

Allowable business expenses reduce the amount of corporation tax your company has to pay on its profits e.g. if you incur an expense of £100, at the current rate of corporation tax of 19%, your company’s corporation tax decreases by £19 (£100 x 19%).

It is important to understand what business expenses you are legitimately allowed to claim.

Whether an expense can be claimed or not depends on whether the expenses meets HMRC’s criteria for a claimable expense.

Important points to remember:

• All expenses must always be actually incurred and must not be estimated or rounded.
• You should keep a record of all your receipts as HMRC can, at any time, request to see proof of these expenses for up to 6 years.
• If IR35 does not apply to your contract, generally speaking, expenses genuinely incurred ‘wholly & exclusively’ for business purposes will be allowable. If any expenses have a ‘dual purpose’ (i.e. non business or private purpose) then they will generally not be allowable. There are, however, examples where the non-business purpose is merely incidental and the expense will still be allowable.

A few of the most common allowable business expenses are:

• Business travel
• Mobile phone
• Telephone
• Salaries
• Employer’s national insurance contributions
• Employer pension contributions
• Accommodation – whilst away from home on business
• Subsistence – whilst working away from home
• Accountancy fee
• Postage and stationery
• Use of home as an office
• Business computer equipment and software
• Internet subscription
• Technical journals and publications
• Business entertaining
• Professional subscriptions to approved bodies
• Bank charges
• VDU Eye tests/eye wear
• Work related training
• Relocation expenses
• Legal and Professional fees
• Business Insurance

For a comprehensive guide on business expenses our clients can access this from our industry leading First Freelance Contractor Cloud.