Why should you care about expenses?
Allowable expenses lower your Ltd company’s profits subject to corporation tax, and you’ll save 19–25% in tax. In other words, claiming £5,000 in business expenses could save you £950–£1,250 in tax. Many new contractors miss out, not knowing what’s allowable.
What expenses can I claim?
Here’s a checklist of typical allowable expenses:
- Travel: Train tickets, mileage (45p/mile, first 10,000 miles), and parking costs when travelling for business.
- Home Office: £6/week flat rate for working at home, or a proportion of rent/electricity if using part of your house exclusively.
- Equipment: Laptops, phones, and software purchases (e.g. a £1,000 laptop is 100% tax deductible).
- Professional Fees: Accounting fees (we charge from £109+/month +VAT), legal fees, and subscriptions (such as to professional bodies).
- Training: Courses or qualifications that improve your skills on the current contract (e.g. £500 to attend a coding bootcamp).
What expenses can’t I claim?
Common expenses you can’t claim:
- Dual-purpose costs: Expenses that have an element of personal use since they’re not considered wholly ‘business’ expenses.
- Personal Living Costs: Clothes (unless branded uniforms), or personal portions of your mobile phone bill.
- Fines: Parking fines or late payment penalties to a supplier.
How do I claim expenses?
Record all expenses in FreeAgent, included in our Solo package. Snap receipts on your phone and upload them via the app for real-time tracking of all your expenses. We’ll review your claims and provide expert guidance so you get the best tax outcome, claim all that’s allowable without getting caught out by HMRC.
Top tips for saving tax on expenses
Here are some extra ways to minimise tax on expenses:
- Claiming mileage vs fuel costs: It’s usually simpler and more tax-efficient to claim mileage for business use of your car instead of actual fuel and servicing costs.
- Pension contributions: You can claim pension contributions up to £60,000/year as an employer pension contribution, saving corporation tax. [Read more on Financial Planning](https://biaccountancy.com/financial-planning).
- Trivial benefits: Give yourself up to 6 x £50 perks/year and pay no tax on them. This is not cash or savings, but can include gifts (like vouchers).
Why work with us?
Our friendly and knowledgeable accountants take the stress out of claiming expenses. With zero turnaround time and same day support on FreeAgent, you’ll never miss a tax deduction again.
Ready to keep more of what you earn?
Chat to us to review your setup and discuss how to maximise expenses in 2025. Call us or fill in our contact form for a free consultation.
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