Are you entitled to limited company tax relief?

If you’re the director of a limited company, you could be missing out on vital tax relief. Here we explain some of the different allowances available to you, and how you can take advantage of them to reduce your tax bill.

Are you entitled to limited company tax relief?

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Before we begin, it’s important to emphasise that you can only receive tax relief for business expenses that you have incurred wholly and exclusively for business purposes (HMRC provides guidance on this). You may not, for instance, claim relief on your regular clothing, simply because you need clothes whether or not you work. By the same token, you cannot expect tax relief if your employer or client has reimbursed you for an expense – for instance fuel to get to and from a contract. Below are some of the important reliefs that you might be able to claim in order to reduce your tax bill:

1. Business mileage and fuel expenses

While you may not claim for your normal commuting costs, you may be able to get tax relief for business mileage incurred when you use your own vehicle, pay for the fuel needed to conduct your business or get to a temporary place of work. You will need to keep any relevant records of dates, mileage and details of your business travel.

2. Professional fees

If you belong to certain approved organisations and bodies which help your business, you can ask for tax relief for the cost of these fees and subscriptions. This is possible if you have registered, obtained a licence or become a member of an HMRC-approved organisation that is necessary to your work.

3. Specialist clothing

You may be able to get tax relief for the cost of specialist clothing if this is required for your work, as long as you have paid for this clothing yourself. This could include overalls, gloves, work boots, protective helmets and uniforms that you are required to wear.

If you must pay for the cost of repairing, cleaning or replacing this type of specialist clothing yourself and your employer doesn’t reimburse you, then you are entitled to tax relief. However, you cannot claim for the initial cost of buying the clothing itself.

4. Capital allowances

You may also be able to get receive allowances to help with the cost of certain items required for your work. This is called capital expenditure and could include stationery like a filing cabinet, desk or computer equipment and is relevant only if you paid for it yourself and the item is necessary for you to do your work.

5. Household expenses

If you work from home, you could also enjoy relief for some household expenses, capital expenditure, and possibly travel expenses (see our blog post on the “24 month rule” for information on claiming travel expenses).

There are many other types of tax relief you could get under the right circumstances. For more information on claiming limited company tax relief, view our limited company FAQs. For expert assistance specifically for limited companies, visit 1st Contact Accounting.

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