As a contractor, you have the benefit of claiming business expenses. This is beneficial in the sense; you will not have to pay taxes for the amount. If you are working through your limited company as a contractor, here are a list of expenses you can claim:
You can claim for your meal costs when you are working away from the normal workplace.
These are expenses you can claim when you travel for work at a temporary place. Rates vary with the mode of transport you choose. You can even claim the parking fee but remember; fines of any kind cannot be claimed. If you choose a public transport, make sure to keep the receipt safe. For 2018-19 it is 45p/mile on the initial 10,000 miles for cars and vans and 25p/mile on additional miles.
The cost of accommodation and breakfast or meals (if you stay overnight) can be claimed. However, these costs must be reasonable.
Special clothing here means an outfit that is required to carry out your work as a contractor. Safety clothing can be a great example.
If the training is necessary for your performance, then this can be claimed. In other words, if the training is genuinely relevant to your line of business and contributes to your expertise.
Home Office Expenses
If you spend time working from home, you can claim a percentage of energy and gas bills, metered water and phone bills. However, these costs are calculated on the basis of time spent at the place, the energy usage and the physical size of your home office. You can also claim internet expenses if the broadband is registered under the name of your limited company.
For 2018/19 tax year, you can claim tax relief on contributions of up to £ 40,000 or 100 percent of your earnings, whichever is lower.
Computer Equipment/ Software
Computer equipment or software can be claimed as a business expense through your limited company only if the value of each of your items is equal to or less than £1,000. If it is over this amount, it becomes a capital expense.
If you become a member of any professional association because it benefits your trade, you can claim this expense against Corporation tax.
Accountancy fees, postage, stationery, and Business Insurance are the other expenses you can claim as a contractor. However, take note, all your expenses to be claimed must be supported by genuine receipts or other authentic evidence such as bank transaction.
To know more about expenses you can claim through your limited company, get in touch with Fabaci.