What expenses can limited company contractors claim

What expenses can limited company contractors claim

22 November 2018

If you contract through a limited company, there are certain expenses that you can claim against your income to reduce your tax liability.

If your limited company makes £50,000 and you claim back £10,000 in allowable expenses, the taxable profit will be £40,000.

There are some rules governing what expenses limited company contractors can claim.

  • Expenses have to be incurred ‘wholly, exclusively and necessarily’ for the contract. This means you can’t claim things that have personal and business uses.
  • You have to keep all receipts and paperwork. You should keep these after the expense claim has been made as they may you may be required to prove you bought items in an investigation.
  • Expenses have to be paid out of a company’s bank account.

Here are some examples of what expenses you can claim as a limited company contractor.

  • Stationary costs including printing and business cards
  • Equipment costs like computers and other hardware
  • Salaries for any employees (typically your own salary)
  • Pension contributions
  • Training courses
  • Professional memberships and relevant journal subscriptions
  • Accommodation costs when working away from home
  • Meal costs when working away form home
  • Travel costs to anywhere that isn’t your usual workplace
  • Mileage costs 
  • Telephone, mobile and broadband costs that are in the company’s name
  • Accountancy fees and other professional services costs
  • Marketing costs including sponsorship of a local sports team
  • Cost of an annual company event up to £150
  • Annual employee eye tests and private medical check-ups
  • Life insurance
  • Childcare costs

IR35 Contracts

If your contract is deemed to be caught by IR35, you will need to pay as if you are an employee of the client that you are working for. This means that you will not be able to claim for any expenses while fulfilling the contract.

Contracts in the public sector are more likely to be caught by IR35. At least until April 2020, when the public sector compliance rules are likely to be extended to the private sector.

Not sure what expenses you can claim? Speak to a member of the Umbrella.co.uk team today. Call: 0800 121 6513.