As a sole trader, you can’t claim for the line rental if you’re using your mobile phone for business and personal use. You can claim the costs of business calls, if these are indicated on an itemised bill. To claim for the costs, you’ll need to set up a mobile contract under your business name, and use it solely for business purposes.
As a limited company director, you’ll need to set up a contract between your company and service provider in order to claim the full costs as a deductible business expense. If the contract is made under your personal name, you won’t be able to claim the costs as an expense.
Refer to our guide on mobile phone expenses for further information.
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Can I expense childcare?
As a sole trader, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the tax-free childcare scheme.
As a limited company director, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the childcare voucher scheme or tax-free childcare scheme.
Can I expense Taxi fares or an Uber?
Taxi fares are generally deductible, as long as the fares aren't incurred for ordinary commuting. According to HMRC, a commute is a trip you make most days between your home and permanent workplace.
Can I expense Professional fees?
The costs incurred for engaging professional services-such as hiring an accountant, lawyer or architect-can be claimed as an allowable expense, as long as these services are carried out solely for business purposes.
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 claim using the cycle to work scheme?
Employers who purchase bicycles and safety equipment for loan to employees can benefit from treating the purchase as capital expenditure eligible for corporation tax relief. VAT can also be claimed back on the purchase unless you are registered on the VAT flat rate scheme.
The loan of bicycles and safety equipment under the cycle to work scheme removes any tax charge to the employee that would usually arise on a taxable benefit.
Can I expense Pensions?
As a sole trader, you can't claim pension contributions as a deductible expense. However, you can get personal tax relief from contributions you make into your pension scheme.
If you're a limited company director, you have the option of making pension contributions through your company. This will reduce your company's profits, and as such reduce the amount of corporation tax your company pays.
What is the 24 month / 2 year rule for expenses?
The 24-month rule, also referred to as the two-year rule, enables contractors to claim travel expenses from their home to a client's office, as long as it is classed as a "temporary workplace".
The following conditions must apply for a work location to be classed as a "temporary workplace"
- The period of engagement is less than 24 months
- The contractor should spend less than 40 percent of their time at the workplace
Essentially, if you work at the client's office for more than 24 months, or spend more than 40 percent of your time at the location, it is considered a permanent workplace-and as such, you won't be able to claim travel or subsistence expenses.
Bear in mind that this is subject to the SDC legislation introduced in April 2016. Further elaboration on SDC can be found in our guide to claiming expenses as an umbrella company contractor.
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.
What is a use of home allowance?
As a self-employed person, there are two ways to calculating the allowance you can claim for working from home. You can claim a fixed rate of £6 per week, or a proportion of household costs used by the business. Further information is available on our resource on the use of home allowance.