Which expenses are allowable for tax purposes?

You will be able to include as company expenses all reasonable pre- and post-incorporation expenses that you have incurred.
You will be able to claim as expenses all the normal costs of running a company, so make sure you keep a record of all expenses, together with the corresponding invoices and receipts. Keep receipts for everything that relates to the business, writing details on the back of the receipt as a reminder where necessary. Although we will not normally wish to see receipts when preparing accounts, HMRC may wish to see them, so you should be meticulous about how you file them. All our clients receive complimentary cloud-based accounting software to allow them to do this.

Subject to the rules mentioned above, you will be able to include as company expenses all reasonable pre- and post-incorporation expenses that you have incurred. Below is a list of expenses that are allowable under Corporation Tax rules:

  • Travel (including from home to client – but there is a 24 month rule)*
  • Business motor mileage (when using your own car)*
  • Networking events
  • CV writing services and company brochure
  • Business stationery
  • IT hardware and software
  • Internet (only if separately billed and in the company name)
  • Telecoms equipment (e.g. mobile phone, but only if in the company name)
  • Membership of professional institutes and associations
  • Other professional subs (e.g. IoD)
  • CPD training (not allowable for IR35)
  • Accountant’s fees (not allowable for IR35)

*Travel and subsistence expenses are restricted to those incurred on one-off journeys for any assignments deemed to be either within IR35 or under the ‘supervision, direction or control’ (SDC) of the end-client. In particular, HMRC consider teachers and lecturers, healthcare workers and social workers to be under the SDC of their end-client because the manner in which they work is governed by regulations. The assumption is that somebody would have the right to supervise their work and check that it complied with the relevant standards.

Entertaining is allowed as a company expense but is disallowed for Corporation Tax purposes, and there are also strict rules regarding what kind of entertaining expenses are allowable.