What expenses can I claim for as a Consultant?
What expenses can I claim for? This is usually one of the first questions our clients have and it’s one of the areas where specialist knowledge makes the difference. The basic HMRC principle is “wholly and exclusively” for the purpose of the business, but as with many things there are reams and reams of rules and the devil is in the detail.
We’ll help you review your business and identify what expenses you can claim against your business, and as such reduce your overall tax bill. There is no one size fits all list on what’s allowable, it depends on the nature of the business and in some circumstances the legal structure (Limited Company or Sole Trader). We’ve set out some of the most popular expenses for a consultant, there will be many others and we’re sorry to say, it might be time to park that idea of a business yacht!
Let’s deal with Company Cars first. The days of them being tax efficient are mostly long gone and it’s now rare that a Company Car will be more tax efficient. The main exception to this can be where you have a low CO2 car and a high business mileage, the combination Capital Allowances and allowable expenses can in some circumstances offset the extra Benefit in Kind tax (associated with a P11d). We’ll help you with this assessment.
You may also be able to claim for travel from your home to your client’s locations in circumstances where your place of work is deemed to be your home. This can include mileage claims, train fares, parking, air fares, hotels and subsistence. This is often a consultant’s biggest spend item.
Working from Home
If you don’t have the option to work from your own business premises you may be able to claim the deemed cost of working from home and reclaim a portion of the appropriate household running costs. This can range from a few hundred pounds to a few thousand pounds. We have the tools and experience to help you calculate the appropriate running costs to offset against your taxable profits.
Subscriptions and Training
If you are a member of a professional body, and it’s on HMRC’s approved list, you will be able to claim for the membership fees. You’ll also be able to claim for appropriate “business related” training. When we say appropriate we mean courses associated with your business rather than a Seafood Cookery course – unless that is you’re a chef!
IT and Phone
You’ll be able to claim for your IT costs where you use the IT for your business. This can include Laptops, iPads, phone systems, Microsoft Office, Business Websites, Printers and many other items – remember only if used for your business. Where there is also a private use element this will need to be considered and the claim appropriately adjusted for.
These days most businesses need a Mobile Phone for business related calls, texts, sometime social media, and email. HMRC accepts this and will allow an appropriate portion of the costs (we’ll help you calculate). This is an area where there can be different rules for a Limited Company vs a Sole Trader.
It’s really important that we all make regular payments into our Pension schemes, as we can’t avoid getting older and most of us don’t want to work forever.
If you operate via Limited Company, the company (your employer) can make the payments for you, these payments are usually deductible against the profits of the company and as such reduce the tax bill. There are rules around this (as there are with most things), we’ll help you navigate a tax effective path to retirement.
The good news is the business is allowed to pay for business related entertainment, the bad news is it’s not usually tax deductible. However, there are some instances where the purpose may be duel (e.g. a conference, a staff party or a training course) and where this is the case we’ll help you navigate an effective route.
Note this doesn’t include a season ticket for you to watch the footy with you mate, unless that your mate is also your customer and it’s deemed appropriate business entertainment.
Piper Hulse will help you review and, where appropriate, plan your business expenses with the help of our Business Expenses Checklist so you can claim the expenses you’re allowed to. This is an area where our specialist knowledge of the HMRC rules adds great value to you and your business. Contact us now to see how you can benefit.
This material is published for the information purposes only. It provides only an overview of the information digested at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by Piper Hulse Limited.