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What expenses can I claim via my limited company?
Posted Mar 29, 2010
This question was answered by Freestyle Accounting.
The expenses you are allowed to claim through your limited company are dependent on the IR35 status of your contract.
Outside IR35
Provided your contract is outside IR35, then the following expenses can be claimed:
- Your gross salary - contractors typically keep this low, in order to maximise the dividends that can be distributed to yourself as a shareholder (thereby avoiding employees and employers national insurance contributions).
- Spouse's salary (which must be actually paid to them and not be unrealistic, having regard to the duties performed). If your spouse is already employed and earning £40,000 or more, there is unlikely to be any tax saving in paying them.
- Travel expenses (provided you have not been at your client site for more than 2 years).
- Car mileage (provided you have not been at your client site for more than 2 years).
- Accommodation and subsistence (provided you have not been at your client site for more than 2 years).
- Telephone - business calls only.
- Books, magazines, subscriptions and courses - where related to business and your contract work.
- Bank charges and interest - on your company bank account.
- Pension scheme - where paid by the company to a HMRC approved scheme.
- Business insurances, business contents and other business related insurances.
- Computer costs.
- Accountancy fees.
- Business related stationery and postage costs. All of the above expenses should be supported by a valid receipt or document, with the exception of salary and car mileage.
Caught by IR35
However, if your contract is caught by IR35 then you can only claim expenses incurred wholly, exclusively and necessarily in the performance of your contract work together with a 5% "administration allowance". These are as follows:
- 5% administration allowance (5% of gross fees received). See our dedicated article.
- Certain travel expenses.
- Certain accommodation expenses.
- Pension contributions.
- Approved professional subscriptions.
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