When you are a small business owner, it is important to be aware of what business expenses you can claim as tax deductions. Depending on the structure of your business, the amount of money you can claim back will vary. As a limited company in the UK, you are able to deduct a wide range of business-related expenses come tax time. Read on to learn more about what business expenses you can claim as a UK limited company.
1. Rent or mortgage interest payments on your business premises
If you own the commercial property where your business is based, you can claim the mortgage interest payments as a deduction. If you rent the property, you can claim the rent payments. Remember that if you use part of your home for business purposes, you can only claim a deduction for the percentage of the home that is used for business.
2. Wages and salaries paid to employees
As a limited company, you are able to deduct wage and salary payments from your taxable income. This includes any bonuses or commissions that you pay to employees. Remember that you must withhold income tax and National Insurance contributions from employee wages before paying them out.
3. Training and professional development expenses for employees
Investing in your employees’ professional development is not only good for morale—it’s also tax deductible! You can deduct training expenses such as course fees, travel costs, and accommodation costs associated with professional development opportunities for employees.
4. Business travel expenses
If you travel for business purposes, you can deduct travel expenses such as airfare, train tickets, and gas mileage. You can also deduct accommodation costs while on business trips. Remember to keep detailed records of all business travel expenses in order to ensure accuracy come tax time.
5. Equipment and machinery purchases
If your business requires specific equipment or machinery in order to operate, you can deduct the cost of these purchases from your taxable income. This includes everything from office furniture to computer equipment to manufacturing machinery. Remember that equipment must be used for business purposes in order to qualify for the deduction—equipment used for personal use does not qualify.
6. Office supplies and materials purchased for business use
From paper and ink cartridges to coffee beans and cleaning supplies, most office supplies and materials are tax deductible as long as they are used solely for business purposes. Keep accurate records of all office supplies and materials purchases in order to ensure accuracy come tax time.
There are many different kinds of expenses that UK small businesses can write off at tax time—but it’s important to remember that these deductions are only available if the expense was incurred strictly for business purposes. Be sure to keep meticulous records throughout the year so that come tax time, you’re prepared with all the documentation needed to support your deductions claims.