Where possible, it is advisable to cover any company expenditure directly using company funds, such as making a payment directly via the company bank account. This ensures that all company transactions are kept in one place, and can be easily tracked.
If you're paying for business expenses through your personal funds, it helps to establish a process for expense tracking and claiming (just as you would, if you were to make a claim from an employer). It's best to set aside time to manage your expense claims on a regular basis, such as once a month or fortnight. You can keep track of your expenses by using a spreadsheet, or through apps such as Expensify.
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Can I expense Conference expenses?
Yes, you can claim the costs of attending business-related conferences as a deductible expense.
Can I expense Phone calls?
As a sole trader:
If you're using your mobile phone line for both business and personal use, you can't claim for line rental. However, you can claim for call costs for business use if you obtain an itemised bill. If you have a separate mobile phone line for business use, you can claim the costs incurred.
As a limited company director:
1. Mobile phone: If your mobile phone contract is between your company and mobile phone provider, and is used for solely business purposes, you can claim the entire bill as an allowable expense.
If you have a personal contract, you can claim for the costs incurred for business calls. You're also able to reclaim the VAT element of the business calls.
2. Landline: If your landline contract is solely for business use, you can claim the cost as an allowable expense. You can also claim for business calls you've made using your home phone line.
Why are expenses important?
Expenses are important as you can claim them against your revenue, which helps to reduce the amount of tax you need to pay.
Can I expense Parties (or staff entertainment)?
As a limited company director, you can can claim for the costs of hosting a staff party, as long as the following conditions apply:
- Your cost per pax shouldn't exceed £150 (including VAT). Your employees may invite a partner, and if they do, your total budget for an employee and an additional guest will be £300.
- The main purpose of the event is to entertain your staff members. As such, most of the event attendees should be your employees.
Do note that the per pax budget of £150 applies across the year, so you can claim for several staff events as long as the costs fall within the budget. You can claim this expense even if you're the sole employee in your business.
As a sole trader, you're not considered an employee. As such, you can't claim the costs unless you have employees.
What expenses can I claim as a Limited Company Director?
As a limited company director, there are various allowable business expenses you can claim for. These include (and aren't limited to):
- Pension contributions
- Staff expenses
- Business mileage
- Mobile phone, landline and broadband expenses
- Costs of forming your company
Further information on the types of expenses you can claim for can be found in our limited company expenses and tax allowances guide.
Can I expense Ebay charges?
Yes, you can claim eBay fees, such as the insertion fee and final value fee as deductible expenses.
Can I expense general travel expenses?
General travel expenses can't be claimed as a deductible business expense. You can only claim for travel-related expenses as long as the trip is made wholly and exclusively for business purposes, and isn't considered 'ordinary commuting'.
Can I expense Food & drink?
You can claim "reasonable" food and drink expenses when you're travelling for business, if:
- You're making an occasional business trip outside of your normal pattern of travel
- You're staying overnight, and are also claiming accommodation costs
- Your trade is, by nature itinerant
Can I expense Computer equipment?
Yes, you can claim the purchase of computers as a deductible expense.
Can I expense Parking?
You can claim parking costs as a deductible expense, as long as it is incurred wholly and exclusively for business purposes. Other allowable business travel expenses include tolls and congestion charges. You can't claim parking fines as a deductible expense.
Can I expense Optical expenses?
You can claim an eye test as an allowable expense, if it is required for the use of visual display equipment in your work.
In general, you can't claim for glasses or contact lenses unless these items are 'wholly and exclusively used for business purposes', and you're able to prove that you don't use them outside of your working houses. One example would be that you have several pairs of glasses, one of which is used only when you're at work.