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Tax deductible expenses

Home as office

If you work from your home occasionally and for short periods of time, you can claim a flat rate allowance of £208 per year without having to keep any receipts.

However, if you use your home office for longer periods and spend a fair amount of time working from your home office, you can claim a proportion of your household expenditure by “renting” space to your company.

Contact us for more information on how to setup up your home office and to use our home office cost calculator.

Insurance

Typically, most contractors are required to take out professional indemnity insurance. The good news is that this and other business insurances, such as employer’s liability and public liability are all fully allowable.

Private Insurance (life, dental, medical)

If a company policy is taken, this is an allowable expense in the business, but it will be a personal taxable benefit in kind for the directors or employees and so they will pay additional national insurance.

If you would like to discuss this further, just contact us and we can put you in touch with a leading independent financial advisor.

Pensions

Pensions are one of the best ways to save tax as a contractor. This is due to the incredibly generous tax relief you can get on contributions you make.

For pensions there two main options

  1. Personal pensions– where you pay personally.
  2. Company pensions – company pays contributions on your behalf.

Tax relief for personal pensions is limited to your total salary. Often contractors earn low tax efficient salaries, so are better off with company pension schemes, where the limits are much higher. We are happy to talk you through in more detail the tax benefits and introduce you to an independent financial advisor, who can give you expert advice.

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