As a limited company director, you can claim business expenses to get what you need to operate successfully and be more tax efficient.
It’s Important that as a director of a limited company, you have a clear understanding of what you can and can’t claim for tax purposes and the rules around claiming expenses.
Rules when claiming limited company expenses
There are certain rules that you need to consider when you claim limited company expenses:
- You can claim expenses you incur during the everyday running of your business.
- You can’t claim for expenses if it’s going to be used for personal use as too.
- You can pay expenses through your business bank account or your personal account and then get reimbursed through the company.
- Some items can’t be claimed as expenses, such as business entertainment.
- You need to keep a paper trail, including VAT receipts to prove business expenses.
- You can claim pre-trading expenses as long as they are legitimate and you have proof.
What you can claim as expenses
The variety of items that can be classed as expenses is huge. It ranges from accommodation and travel expenses to professional development and equipment expenses and even bank charges! Here’s a list of some acceptable expenses you can claim:
- Business insurance
- Advertising marketing and PR spend
- Accommodation costs
- Bank charges
- Use of home office
- Gifts entertainments and trivial benefits
- Professional subscriptions, e.g. Magazines
- Phone bills
- Annual staff party, e.g. Christmas party
- Equipment costs
- Professional development costs
- Travel expenses
- Start-up costs
- Director salary national insurance contributions
- Pension contributions
The government’s website has an A – Z list of what you can claim as a business expense and an overview of what can be classed as that expense. Click here to head to the government’s website.
When working out what can count as an expense and what doesn’t, you should seek professional guidance from an accountant. If you fail to file for the right expenses, it’s considered tax evasion, which carries a penalty of a fine or even jail time.
In the next part of this blog series, we’ll be looking at paying yourself as a limited company director.