Efficient management of tax plays a vital role in a success of a business. To prevent your business from overpaying tax, you need to factor in all your expenses. Unclaimed expenses increase your profit in tax returns more than your actual profits, and you end up paying more taxes. Limited companies are liable to pay Corporation Tax. For accurately filing your cooperate tax, you need to keep accurate financial records. HMRC requires you to have financial records of the last six years. Keeping records is not just mere legality but helps you to account for your expenses efficiently.
If you own a business, you can either pay your expenses from a company business account or personals accounts. It is necessary to keep an accurate record of your company expenses to claim tax relief.
You can claim the following expenses while running a limited company:
Employees’ expenses
Small businesses can claim employees’ expenses. Your employees must keep all the receipts of their transactions aided by the company for claiming these expenses.
Accountancy fee
You can claim an accountancy fee as your limited company expenses if the accountant is solely responsible for company affairs. However, if the accountant is also involved in dealing with your personal affairs, this can be recorded as a benefit in kind and will be taxable to you personally.
Accommodation and travel costs
You can file for accommodations and travel costs in your corporation tax return, provided it is for business purposes. However, the expenses filed shall be reasonable. HMRC is most likely to investigate you if you file excessive claims for accommodation and travel. Accommodation and travel costs also include the money you spent on transport, food, paying tolls and parking fees, petrol expenses and other costs incurred on necessary needs during traveling for business purpose.
Advertising, marketing, and PR
These are the most important aspect of running a successful business. Every business needs marketing and PR to engage with its potential customer, and any cost incurred during this can be included in your expenses while filing the tax return. But such services shall be exclusively for the business you are filing tax returns.
Business insurance policy
You can also factor in all costs or money you pay for business insurance policies in your tax returns.
Communication devices
You can claim any cost incurred on mobile phones, landlines, and broadband if such devices are used only for business. But if you are using personal devices for business purposes like making a business call, you need to provide HMRC proof of it.
Charity donations
You can also claim tax reliefs on your total business profit by filing any charity you made as a limited company. These donations can be in the form of money, equipment, sponsorship payment, and on land or shares in any other company.
Childcare cost
HMRC doesn’t consider childcare as legitimate business expenses. However, employees and the company director can include childcare expenses on their tax returns if using either a childcare Voucher Scheme or a tax-free Childcare scheme.
Employee expenses
Any expenses incurred on the employees of your limited company can be included in business expenses. However, HMRC requires you to maintain accurate records of all the expenses and make sure allowable expense rules are met. You can claim employees’ expenses including, salaries, pensions, benefits, agency fees, national insurance, uniform for employees, and bonuses.
Equipment expense
You can receive tax relief on any cost incurred in buying equipment necessary for your duty as a company director. These expenses include the payment for buying computers, printers, software, and any other costs on equipping or furnishing an office.
Expenses on company formation
The cost or payment you make in setting your company, including mandatory company formation cost, can also be claimed as company expenses.
Look up how LYEL Accountants can help you with company formation.
Legal expenses
Any expenses you pay to legal advisors or for legal services for your company can also be accounted as business expenses.
Look for services we provide at LYEL Accountants, the service you can trust.
Healthcare expenses
The medical insurance you provide to your employees is considered a benefit in kind on which employees have to pay personal tax. However, you can claim tax relief for the medical insurance of employees working abroad and for an annual checkup.
You can also claim expenses on Eye tests, glasses and spectacles, provided that it is necessary for using visual display equipment such as using a computer during your business work.
Subscriptions
Any subscription cost for membership of HMRC-approved professional bodies, given that the subscription is necessary for your business, can also be claimed for tax reliefs.
Using the home as your office
If you are working from home, you can claim £6 weekly without the need to keep any record. You can also set your home office as a rented place for business by creating a rental agreement between your company and yourself stating that the home office is solely for business purposes. Also, make sure the rent amount is over £312 per annum, and the amount is reasonable to claim tax relief.
LYEL Accountants SME cooperate finance services
LYEL Accountants provides you with a wide range of cooperating finance services to small businesses and entrepreneurs. Our services include:
- Expert advice and insight on strategic and commercial aspects of a business.
- Financial forecasting to prepare your business for future possibilities.
- A full investigation and audits to help a client to sell or buy a company.
- Helping with negotiating corporate finance.
- Impressing potential investors through the best presentation of your business with financial modeling and forecast.
