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What expenses can I claim through my Limited Company?

There are so many myths and misinformation around what you can and can’t claim as a contractor working outside of IR35. The following is not a definitive list, but you can rely on its accuracy and if you have any other questions about expenses – just pick up the phone and ask.

The only legal stipulation around each of the following is that the expenses incurred are ‘wholly, exclusively and necessarily’ for running your business:

• Travelling (subject to the 24 month rule)
• Business mileage (subject to the 24 month rule)
• Business parking and congestion charges (subject to the 24 month rule)
• Accommodation (if required to work away from home overnight)
• Subsistence (evening meals relating to the above and a flat rate to cover incidental costs)
• Mobile phone bills (if in the name of the limited company)
• Bank interest and charges (company held accounts only)
• Professional subscriptions/memberships
• Accountancy fees
• Legal and professional fees (relating to the company only)
• Printing, postage and stationery
• Fixed assets required for business activities of the company (NB. Be aware of HMRC’s “duality of purpose” argument particularly relating to home office furniture and refurbishment)
• Continuing professional development training costs (not including training costs for new skills)
• Insurance (usually a contractual requirement for limited company contractors operating outside of IR35)
• Cost of goods sold on to clients
• Computer consumables
• Business entertainment (although this is not allowable for a Corporation Tax deduction)
• Annual staff events (up to £150 per head within the personal tax year, for every employee plus a guest each)
• Wages and salaries (normally a minimal salary to use up an individual’s NI free allowance)
• Pension contributions made to an approved company scheme
• Books and publications related to the business of the company
• Use of home as office at a flat rate of £4 per week/£18 per month (unless evidence of the ‘separate metered cost’ of running your business from home can be provided)
• Relevant Life insurance premiums
• Childcare (subject to specific conditions)
• Annual eye tests plus the cost of any lenses required for VDU use only (minimum requirement frames)
• Safety clothing/equipment required to comply with Health & Safety regulations
• Equipment or services provided to employees with a disability (inc. hearing aids)
• Long-service awards (with certain restrictions)
• Executive income protection
• Trivial benefits to employees (such as small gifts, seasonal gifts, a Christmas turkey, seasonal flu jabs, tea and coffee, water cooling dispenser)
• Cycle to work scheme (employers can claim capital allowances and employees can borrow the bicycle as a tax exempt benefit)
• Commercial vehicle costs (especially if you are caught by the 24 month rule)

What expenses can’t I claim through my limited company?

• Lunches, teas, coffees, breakfasts etc unless these are genuine business entertainment
• Gym membership (this will trigger a P11D benefit in kind charge to you and your company)
• Health Insurance (this will trigger a P11D benefit in kind charge to you and your company)
• Household bills (eg electricity, gas, water, council tax, rent etc)
• Broadband (unless it was specifically installed as a requirement of your company’s business)
• Training costs for new and irrelevant qualifications/skills
• Travel to and from a permanent place of work
• Personal grooming and business dress
• Private school and university fees
• Weddings
• Flying lessons
• Massages
• Golf club membership fees
• Professional fees for the preparation of your Personal Tax Return (unless as part of a bundled package)
• Making yourself redundant