To reduce your tax liability, you need to know what you can write off as business expenses as a contractor running a limited company. HMRC rules are clear that business expense write offs for tax purposes include the costs of carrying on business. These business expenses have to be “ordinary and necessary”. If your expense is partly used for personal reasons, make sure you only write off the business part. There are a few ‘grey areas’, so you should always check with us if you are unsure about the legitimacy of your expense claims.
- Home property taxes
- Utility bills
- Repairs and maintenance
- Bank charges and interest on your company bank account
- VAT on expenses if your company is VAT registered
- Business Insurance, such as professional indemnity and business liability cover
- Professional Fees, such as accountancy fees
- Telephone, mobile, fax and internet bills
- Travel expenses
- Business gifts and Entertainment
- iPads, Android Tablets, Cameras
Some important things to consider
- Hold onto your receipts: Keep your receipts for at least six years in case HMRC choose to investigate. Ask us about easily scanning and storing your receipts using our recommended cloud tools. Say goodbye to paper!
- Schedule E Expenses: Speak to us about how you can further reduce the amount of tax you pay by claiming Schedule E expenses via your umbrella company or contracting limited company.
- Company car or not?: As a limited company contractor we can advise you on the option of running a company car and whether the tax costs make it worthwhile.
- When a contract requires you to relocate: Speak to us about deductions and how to deal with relocation costs.
- Claiming expenses from clients for flights: Ask us for advice if you’re travelling on behalf of your clients – before you face the many challenges over expenses rules and IR35.
Remember, these are just some suggestions. For more detailed descriptions of tax write-offs for contractors, read this tax-write off list. Get in touch with us for professional advice from your own online, personal chartered accountant. We’re happy to provide answers to any questions you have!