The company is eligible for tax relief on expenses related to advertising and marketing activities. It’s important to distinguish between marketing and entertaining, as HMRC may scrutinise this distinction.

If invoices issued in good faith remain unpaid due to a customer’s inability or refusal to pay, they can be written off. VAT on such bad debts can be reclaimed six months after the invoice date. A provision for bad debt can be included in the company’s year-end accounts. This differs from issuing a credit note, which is typically done to correct errors in the original invoice, not because the debt is uncollectible.

For sole proprietors working from home without a separate business broadband contract, you can claim the business portion of your home broadband costs (using itemised bills) and a percentage of the line rental. If you have a fixed broadband fee, determine the business usage percentage by assessing the extent of business versus personal use. Ensure the company doesn’t directly pay your home broadband bill, as this would be considered a taxable benefit. Instead, pay the bill personally and then claim the business-use portion from the company.

With a dedicated business broadband contract in the company’s name, the company should directly pay this expense. The full cost of the broadband line rental and business usage is tax-deductible.

As a company director, you can request reimbursement from the company for additional costs incurred from working at home, such as increased electricity or gas usage. Fixed costs like mortgage payments and council tax, which remain constant regardless of home working, cannot be claimed without incurring additional tax.

Homeworking Allowance:

Employees seeking to claim more than £6 per week must maintain records to support their claim. Eligible claims typically include:

• Additional costs of gas and electricity consumed during work hours.
• Metered water usage directly related to work duties.
• Costs of business-related telephone calls.

No relief is available for council tax, rates, rent, mortgage interest, household insurance premiums, or similar expenses.

For assistance in determining claimable amounts, please speak to our team for more detailed calculation.

HMRC classifies council tax as a personal expense; therefore, it is not claimable.

Insurance expenses are claimable.

Business rates are claimable. Note that rates are typically paid over 10 months, so adjust any recurring postings accordingly.

Rent, usually paid quarterly in advance, is an allowable expense.

Expenses for repairing equipment owned by the business are allowable.

Costs for electricity, gas, water, oil, etc., are allowable.

Duplication of rent generally occurs in two scenarios:

1. A contractor relocates for a new contract, leading to additional rent or accommodation costs.
2. A contractor opts to rent accommodation instead of incurring hotel costs for economic reasons.

HMRC may argue that such costs are non-allowable. We typically advise against claiming these expenses. However, if you can demonstrate to HMRC that these costs are less than alternative options you’ve considered, they may agree. Clients should use their discretion based on this interpretation.

Companies making Gift Aid donations to charity can usually claim tax relief on these contributions. For other charitable donations, the tax treatment may vary.

The company can provide tax-free childcare vouchers up to £55 per week per employee, subject to certain conditions. Alternatively, payments to registered childcare providers can be made directly by the company.

Employing your children can be tax-efficient, provided they perform genuine work appropriate for their age, and payments are reasonable for the tasks completed. Ensure compliance with child employment laws and maintain proper records.

The cost of uniforms or protective clothing required for work is an allowable expense. However, everyday clothing, even if worn for work purposes, is not deductible.

Purchasing computer equipment for business use is an allowable expense. If there’s any personal use, an appropriate adjustment should be made to account for this.

Business-related bicycle travel can be reimbursed at a rate of 20p per mile. Keep detailed records of journeys to substantiate claims.

The company can provide bicycles and safety equipment to employees as a tax-free benefit, provided certain conditions are met, including that the equipment is used mainly for qualifying journeys.

Depreciation is not an allowable expense for tax purposes. Instead, capital allowances can be claimed on qualifying assets.

Electricity costs incurred for business purposes are deductible. For home offices, claim the proportion related to business use.

Client entertainment expenses are generally not tax-deductible. However, they can be recorded in the accounts and may be subject to VAT recovery rules.

Staff entertainment, such as annual parties, is allowable for tax purposes up to £150 per head per year. Exceeding this limit may result in a taxable benefit for employees.

Airfare for business travel is an allowable expense. Ensure that travel is necessary for business purposes and retain all relevant documentation.

Meals incurred during business travel or when entertaining clients are subject to specific tax rules. Generally, subsistence costs during business trips are allowable, while client entertainment is not.

Gifts to clients are allowable up to £50 per recipient per year, provided they are not food, drink, tobacco, or vouchers exchangeable for goods. The gift must also carry a conspicuous advertisement for the business.

Providing gym memberships to employees is generally considered a taxable benefit. However, on-site gym facilities available to all staff may be exempt.

Health insurance provided to employees is typically a taxable benefit and should be reported accordingly.

Hotel stays for business trips are allowable expenses. Ensure that the travel is necessary for business purposes and maintain appropriate records.

Business-related insurance premiums are deductible expenses. Personal insurance costs are not.

Life insurance premiums are generally not deductible unless they are part of an approved employee scheme.

Medical treatment costs are typically not allowable, except in specific circumstances, such as treatment required due to a work-related incident.

Business mileage in personal vehicles can be reimbursed at HMRC-approved rates. Keep detailed mileage logs to support claims.

The company can provide one mobile phone per employee as a tax-free benefit, provided the contract is in the company’s name.

Fines incurred for traffic violations are not allowable expenses, regardless of whether they occur during business activities.

Employer contributions to employee pension schemes are allowable expenses, subject to certain limits and conditions.

Fees paid to professional bodies related to the business are deductible. Ensure the organization is approved by HMRC.

Subscriptions to professional journals and organizations relevant to the business are allowable expenses.

Repairs to a home office can be claimed proportionally based on business use. Improvements or enhancements are generally not deductible.

The company may cover relocation expenses up to £8,000 per employee tax-free, provided specific criteria are met.

Sponsorship payments can be deductible if they are made wholly and exclusively for business purposes and provide a clear benefit to the company.

Costs for office supplies and stationery used in the business are allowable expenses.

Business-related telephone expenses are deductible. For home phones, only the business proportion can be claimed.

Charges for tolls and parking fees incurred during business travel are allowable expenses. Penalties or fines are not.

Train fares for business travel are deductible expenses. Ensure travel is necessary for business purposes and retain all tickets and receipts.

Travel expenses incurred wholly and exclusively for business purposes are allowable. Maintain detailed records to substantiate claims.

Training costs are deductible if they are related to the current trade and update existing skills. Training for new skills may not be allowable.

Expenses for hosting and maintaining a business website are allowable. Ensure costs are directly related to business activities.