TLC Top tips.. making the most of director’s allowances
5th September 2016
If you run a limited company there’s a wide range of things you can buy as legitimate business expenses which come off your taxable profits, ultimately reducing your tax bill.
Here are five ideas of ways to make the most of these allowable director’s expenses.
1. Accommodation, food and drink for directors’ meetings
It is reasonable to have some of your team or directors’ meetings away from your office, which could mean you incur costs for meeting space, food and drink. HMRC tend to be happier if you travel a bit further afield for things like directors’ meetings (so you actually make a valid business trip, perhaps to visit a client ahead of the meeting). You could also choose to go away for the night with your fellow directors and charge the accommodation costs to the company too. Team meetings are fine at the local pub.
2. Equipment costs
Things like mobile phones, tablets, laptops, briefcases and sat navs can also reasonably be booked against the business if you legitimately use them for business purposes. This kind of purchase falls into a slightly different type of expense (capital allowances) but generally you get 100% relief on an annual investment allowance against your tax.
Don’t worry about how to deal with the numbers, we’ll advise about what’s best given your situation when it comes to your year end.
3. Private health insurance
You can choose to pay for this for both the company directors and employees. There are a multitude of options on the market with variations on the level of cover, so make sure you take advice from a trusted Independent Financial Advisor about what’s best for you. These types of perks do mean you take a small hit on your tax code in the form of a benefit in kind – but don’t worry we can help work all that out.
4. Business magazines and books
Don’t think you can put all of your Amazon purchases through, but business-related or self-development books are legitimate business expenses. Some of Team TLC’s recent favourites include ReWork, Blink and To Sell Is Human.
5. Directors’ pension contributions
As accountants we can’t give financial advice, so you need to speak to an Independent Financial Advisor, but as you can claim Corporation Tax Relief on pension contributions made directly from the company bank account, it’s a sensible way to save on tax.
As with all expenses you want to claim, make sure you keep a record of the receipt. We recommend ReceiptBank, which allows you to take a photograph of the receipt and have it sent straight to Xero. This clever software reads the receipt, picks up the supplier and purchase cost, and even suggests a category for the expense.
If you want any advice about specific purchases you’re thinking of making, just give us a call on 01937 547 109.