Allowable expenses limited companies can claim 

So, you’ve got your limited company up and running – great job! Now, let’s talk about something that will make your business’ finances really shine: allowable expenses. 🧾

These are the business-related costs you can claim to reduce your tax bill, keeping your hard-earned cash where it belongs – in your company’s pocket. 💰 But here’s the deal: not all expenses qualify, so it’s important to know which ones you can actually claim.

In this guide, we’ll walk you through the essentials of allowable expenses for limited companies. We’ll cover everything from common allowable and disallowable expenses to mileage allowances, helping you maximise your savings and keep things tax-compliant. 🚗

What are allowable expenses for limited companies? 

Let’s break it down: allowable expenses are business costs that you can deduct from your income to reduce the tax your limited company pays. Pretty handy, right? 

Think office supplies, staff wages, utility bills, marketing costs, and even mileage allowance expenses for company cars. 💨

All these costs count as allowable expenses for limited companies, and you can claim them to lower your tax bill. But here’s the catch: not everything qualifies. Some expenses won’t make the cut, so knowing what’s allowed and what’s not is important. Don’t worry though – we’ll get to those “grey area” costs soon! 🧐

Allowable and disallowable expenses 

When claiming expenses, knowing the difference between allowable and disallowable expenses is crucial. 

To help you get a clearer picture, here’s a handy table to break it down:

Now that you’ve got the inside scoop on what you can and can’t claim, keep this guide close by while sorting your expenses. It’ll help you avoid any accidental claims that could land you in hot water with HMRC. 🔥

Special considerations for limited companies

When it comes to allowable expenses for limited companies, there are a few special rules to keep in mind. These considerations help ensure that your company stays tax-compliant and that you don’t miss out on claiming all the costs you’re entitled to. Let’s break it down! 

Capital allowances for bigger purchases

For larger items that your business buys, like equipment, vehicles, or machinery, you can use capital allowances to claim back the cost over several years. In the eyes of HMRC, capital allowances are classed as another allowable expense. ✨

Employee benefits & perks

Did you know that some perks and benefits provided to your employees (or even yourself, if you’re a director) can also be claimed as allowable expenses? 🎁

We’re talking company cars, health insurance, and pension contributions. However, these need to be reported correctly, and some benefits might be subject to tax (hello, benefit-in-kind!). So, always make sure you’re following the rules if you’re planning to offer them.

VAT on allowable expenses

If your company is VAT-registered, you can claim VAT back on allowable expenses. However, this only applies to VAT-registered purchases, so be sure to keep an eye on VAT invoices to make sure you’re claiming correctly.

How to keep track of your allowable expenses 

Staying organised with your expenses is key to keeping things tax-compliant and saving time come filing season. Here’s how you can easily manage everything:

• Use digital tools – forget paper receipts! Log and categorise your expenses, keeping everything ready in one place to file. 
• Save your receipts – snap photos of paper receipts or save digital invoices to keep them organised and easily accessible. 
• Categorise your expenses – group your expenses (office supplies, travel, etc.) to stay organised for your Self Assessment. 📎

You can tackle all this with our easy-to-use (and free!) bookkeeping tools, that make managing your taxes a breeze.

Claiming your allowable expenses 

When it comes to claiming allowable expenses for your limited company, it’s important to follow the right steps: 

First, you’ll need to complete a CT600 (Corporate Tax Return) to report your company’s profits and claim your allowable expenses. You may also be required to complete other specific forms for your corporate tax return. Make sure you’re only claiming expenses that are necessary and exclusively for running your business.

It’s also essential to be mindful of deadlines. Your CT600 (Corporate Tax Return) is due 12 months after the end of your company’s accounting period. Be sure to keep all receipts and invoices organised and accessible in case HMRC asks for proof of your claims. 📄

To make things easier, you can use our Corporation Tax Calculator to get a quick estimate of your tax liability and ensure you’re on track for your return!

What to do if you’ve made a mistake on your tax return

Made a mistake on your tax return? Don’t worry! HMRC lets you fix errors up to 12 months after your filing deadline, so there’s still time to set things right. Simply log in to your HMRC account, update the relevant sections, and resubmit.

If you’ve overclaimed allowable expenses, adjust your figures and repay any extra tax owed. Claimed too little? You could be in for a refund. 💸 Keep a record of everything, and if it feels like too much hassle, let us take the wheel. 

All set to file

That’s a wrap on allowable expenses for your limited company! By knowing what you can (and can’t) claim, you’re not just saving on tax – you’re running your business like a pro. 🥳

And remember, when it comes to filing, we’ve got your back. Sit back, relax, and let one of our vetted accountants handle the nitty-gritty. No stress, no hassle, just a perfectly filed return – allowable expenses and all.