5 Tax Deductions Every Limited Company Should Know About
Running a limited company can be a challenging task, especially when it comes to managing your finances. One of the most critical aspects of running a business is understanding your tax liabilities. As a limited company, you have to comply with various tax laws and regulations in the UK, which can be daunting. However, there are many tax deductions available for limited companies that can help reduce their tax bills. In this blog, we will explore the top 5 UK tax deductions every limited company should know about.
Staff costs and salaries
As a limited company, you can deduct staff costs and salaries from your taxable profits. This includes salaries, bonuses, and employer’s National Insurance contributions. However, keep in mind that you cannot claim for any salaries or bonuses that you pay yourself as a director. You can also claim for the cost of hiring temporary staff or freelancers, such as accountants, lawyers, or marketing consultants.
Business premises expenses
You can also claim for expenses related to your business premises, including rent, business rates, utilities, and insurance. If you work from home, you can claim a portion of your household expenses, such as mortgage interest, council tax, and utility bills. However, to be eligible for these deductions, you must use a dedicated area of your home exclusively for business purposes.
Capital allowances allow you to deduct the cost of buying or improving assets, such as machinery, equipment, and vehicles, from your taxable profits. You can claim for the full cost of the asset, as long as it is used exclusively for business purposes. However, some assets, such as cars, have restrictions on the amount of capital allowances you can claim.
As a limited company, you can claim for travel expenses related to your business. This includes fuel costs, parking fees, and public transport fares. However, you cannot claim for any travel expenses related to your daily commute to and from work. You can also claim for accommodation and subsistence costs if you need to travel for business purposes.
Training and education
Finally, you can claim for training and education expenses related to your business. This includes courses, seminars, and workshops that help you improve your skills and knowledge. You can also claim for the cost of books and journals that are relevant to your business. However, you cannot claim for any expenses related to acquiring new skills that are not directly related to your business.
Managing your finances as a limited company can be complicated, but taking advantage of available tax deductions can help reduce your tax bill. By understanding the top 5 UK tax deductions every limited company should know about, you can ensure that you are not paying more taxes than you should be. Staff costs and salaries, business premises expenses, capital allowances, travel expenses, and training and education expenses are just a few of the deductions available for limited companies in the UK. Be sure to keep accurate records of your expenses and consult with a tax professional if you have any questions or concerns. With proper planning and knowledge, you can maximise your tax savings and keep more money in your business.
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Company Accounts FAQs
Q. Can I claim for the cost of entertaining clients or customers?
A. No, entertainment expenses are not tax-deductible.
Q. Can I claim for the cost of my personal mobile phone bill?
A. No, you can only claim for the cost of a business mobile phone and associated costs.
Q. Can I claim for the cost of uniforms or protective clothing?
A. Yes, you can claim for the cost of uniforms or protective clothing that you need for your business.
Q. Can I claim for the cost of my personal computer?
A. No, you can only claim for the cost of a computer that is used exclusively for business purposes.
Q. Can I claim for the cost of business gifts?
A. Yes, you can claim for the cost of business gifts as long as they are not worth more than £50 per recipient.