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Tax deductible expenses

A guide for tax deductible expenses


We have written this guide for contractors, freelancers and small businesses to explain to them in straight forward English what expenses they can and can’t claim.

The long and short of is that putting through “allowable” expense means you will be pay less corporation tax as the expense will be deducted from your turnover when calculating your company’s tax bill.

Remember a professionally qualified chartered certified accountant will be able to guide you through expense claims step by step and help you save as much tax as is possible.

As a client of >>Nimble Jack Accounting, we will help you every step of the way and will answer all of your questions about expenses. We also conduct a unique quarterly tax saving review specifically for you and will let you know if we think you’ve forgotten to claim for a particular expense.

Paying for expenses

a guide for tax deductible expensesBefore we go through the different types of expenses, we should say that, it is always best to pay for business expenses using your business debit or credit card or direct from your business bank account. This keeps things simple and straightforward. When you pay for a business expense with your personal debit or credit card, you have to remember to claim the amount back from your company.

Therefore, always setup a limited company business bank account as soon as possible. We have a special relationship with the leading UK banks and can help make this process completely stress free.

A summary of the main expenses that are deductible

Here is a list of the main ones:

  • Accommodation
  • Accountancy fees
  • Bank charges and interest
  • Business travel
  • Equipment
  • Travel
  • Home as office
  • Insurance
  • Pensions
  • Travel
  • Subsistence
  • Salaries
  • Subscriptions
  • Stationary
  • Telephones
  • Mobile and smart phones
  • Training

The big rule – “wholly and exclusively”

This is one area that a lot of our contractors and freelancers get confused about.

When it comes to all expenses there is one simple test HMRC state that the expense must fulfil, it should be wholly and exclusively for business purposes.

Duality of purpose

Generally, when an expense is not “wholly and exclusively” for business purposes, you will not be able to claim the amount against tax. Typically this would be something like a business suit, even though your personal use of it might only be “incidental”.

However, where a definite proportion of the expense is wholly and exclusively for business, you can allow that proportion.

Next: “Claimable Expenses”
Any questions? Speak to one of our friendly accountants on 020 7969 2879.