We explore some of the most frequently asked expense questions when working through your PSC.
There are three options available to you when looking to claim household costs whilst working home and each has its specific criteria.
One of the options which could enable you claim an amount for mortgage/rent etc. is if you draw up a rental licence between you and your company. This must be a reasonable, commercial agreement based on a commercial rent – and most importantly although your company benefits from tax relief on the rental payments, you will incur personal tax on the rent received when you complete your annual self-assessment return. There are many factors to consider here that would require a discussion with your accountant with regards this approach.
The other alternatives are for your company to reimburse you £6 per week or £26 per month for monthly paid employees working regularly at home without you having to justify the amount paid (simplest from an administrative point of view).
Or your company can reimburse you for actual additional costs of working from home-but you need to keep the receipts to support same.
What can you claim if you have a dedicated room in the hours for home working?
You can claim for costs such as laptops, desk chair, keyboard, stationery, a desk etc-the important point to note is that they are only used for business purposes with insignificant private use. You will be also to able to claim mobile phone costs (if in company name) and home phone bills and broadband if you meet the criteria.
Should I purchase an electric car through my company?
It is important to consider your finance plans/funding for the vehicle and also the length of your contract, together with any associated company and personal tax benefits of same.
- How do you propose to fund the purchase i.e. outright purchase (cash), hire purchase, lease purchase, lease hire?
- How long do you expect the finance/lease agreement to last?
- How much do you expect the monthly payment to be?
Company tax considerations
The company benefits from 100% first year capital allowances on the purchase of an electric car – in addition to electric charging points which also attract 100% first year capital allowances.
Personal tax implications
As an individual, if you use your company car for private use, then this attracts a benefit in kind – essentially you would pay more tax as a result of using a company asset for personal use and the value of the benefit would be reported on your annual Plld form (return of expenses and benefits).
However, benefits in kind arising in respect of electric cars are more favorable and are calculated at 2% x list price of your car (compared to between 15% – 37% for petrol/diesel cars).
In addition, where the electricity is provided by the employer at the employee’s home (via a charging point) then there is no taxable benefit.
Our tax department can do a calculation to work out the benefit in kind charge that would be due, therefore please get in contact with us if you require any further information.
Can I claim for a laptop, and what are the benefits in doing so?
Your company can purchase a laptop – as long as there it is wholly for business use, with insignificant personal use, then the company will benefit from 100% capital allowances can purchase a laptop from your limited company, corporation tax relief will be applied at the point we prepare your draft year-end accounts.
Please ensure the payment is made from your business bank account and any invoice is addressed to your company.
Can I make a charity donation and get tax relief?
You can receive corporation tax relief on your charity donations if they are paid directly from your business bank account and the charity is a UK registered charity. Further details are available here.
Can I claim my pension contributions as an expense?
You can, in order to receive corporation tax relief on your pension contributions you’ll need to ensure that your payments are “employer contributions”.
Should you require further information on this then I would advise speaking with our pension team.
Can I convert a shed or garage into a room for a home office, and if so, what can I claim?
Generally if the shed/garage is to be wholly for business use.
Can I claim a smart TV as a monitor?
If there is a business need business need to use a smart TV as a monitor and this is used solely for business purposes then yes this should be fine, you would need to justify this to HMRC in the event of an investigation.
If the TV is also used personally then this wouldn’t qualify for corporation tax relief.
Can I claim a smart watch through my company?
We would advise against claiming a smart watch through the company, HMRC would argue that the watch has a duality of use and therefore corporation tax relief wouldn’t be applied.
Can I claim my company set up fees as expenses?
The fee for setting up your limited company cannot be claimed as an expense.