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Example:
If you earn 5,000 a month and you do not have any expenses then you must pay tax on the full
5,000.
However, if you were to earn 5,000 in a month and incur 1,000 in business expenses, your
taxable profits would be 4,000. This is because your business expenses are deducted from your
total earnings to leave your taxable profits.
Business Travel If you are required to travel for your business then you are able to claim
the cost as a business expense. Contractors can claim mileage of 45p per mile for the first
10,000 miles traveled in a financial year and 25p per mile thereafter. This amount covers fuel
and any wear and tear on your car. If you take a passenger in the car with you then you are
able to claim an extra 5p per mile. If you travel via public transport you are able to claim the
cost as an expense as long as you keep the receipt. Toll fees, congestion charges and
parking costs are also able to be claimed as expenses.
Mobile Phone Bill If you use your phone entirely for business related use then you are
able to expense your entire phone bill. However, most contractors will use their phone for
both business and personal use and in this case only the minutes and texts that have been
used for business purposes are able to be expensed.
Training Courses If the training course in question is wholly and exclusively for business
purposes then the cost could be expensed.
Stationery Branded stationery such as letter heads, envelopes, pens and other items are
able to be claimed as expenses if they are used solely for business use.
Clothing As a general rule clothing that could be used as part of your everyday wardrobe
such as business suit or business dress cannot be claimed as an expense, even if you only
use them for work. Clothing that is able to be claimed as a business expense includes
branded uniform items and protective work clothing.
I want to claim for some furniture and for the re-decoration of my home
office; I trust that this is acceptable?
Claiming furniture for your home office is an acceptable expense, however, there are certain
criteria that would have to be met:
It must first and foremost be relevant and its cost not excessive for its purpose as office
furniture - furniture up to a value of 300 is unlikely to be questioned in an HMRC
investigation.
The personal use of the furniture must be insignificant - when measuring significance, the
frequency of the furnitures use for work purposes should be considered, if personal use is
anything more than insignificant a benefit in kind would arise
In the event of an investigation from the HMRC, you must be able to justify that the personal
use is insignificant. If you are not confident that this justification can be met, we would
advise that you do not claim for the furniture.
If you wish to rent an office to work from that isnt a room/office in your personal residence
(please see our Home Office Guidelines for more information) then this is a possibility, however,
it will be best to ensure that; the requirement is absolutely necessary to the running of the
business, the rental agreement is in your Limited Company name and ideally paid direct from the
company bank account.
Whilst you could theoretically claim for an expense of this nature, it is certainly not something that
we would advise is claimed and there are several things that should be taken into account before
making a decision as to whether to proceed:
You could potentially lose out of the full benefit of Private Principle Residence relief (PRR)
and thus suffer capital gains tax when your home is sold
If such an expense was to be claimed as a business expense, it should be furnished suitably
as an office and so should not contain personal/leisure equipment in the event of a HMRC
investigation you may be required to justify it as an office space not just an improvement to
your home
The cost should not be excessive and any work carried out in its construction should be
commercial.
For more information about what expenses you can claim as a contractor, please get in
touch with Your Dedicated Account Manager who will be happy to answer any of your
questions on his direct extension or on 020 3818 9530 or
email support@oasisaccountants.co.uk.