MILEAGE ALLOWANCES
If you work through a limited company you will have a choice of either
running a company car or using your own car for business trips. The
costs of each option are explored on our Cars and Vans page, but if
you use your own vehicle you are allowed to claim mileage allowances
as follows:
Up to 10,000 miles – 45p per mile
Above 10,000 miles – 25p per mile
This still applies to cars of all shapes, sizes and CO2 levels. You can
also claim 24p per mile for a motor cycle, 20p for a bicycle plus an
extra 5p per mile for each passenger you take with you (provided they
are also away on business).
The above rates are meant to cover all your running costs, not just
petrol, although there are separate advisory fuel rates for claiming
back VAT. You can also claim for any motoring costs that are incurred
on the day, such as parking, tolls and congestion zone charges,
although not fines for parking or traffic contraventions!
Always make sure you claim these as they are tax free and fully
deductible by the company against corporation tax.
OVERNIGHT ALLOWANCES
These are often overlooked but are a useful tax free perk if you travel a
lot on business. The taxman recognises that you will incur various
small expenses whilst away on business that do not fall into the
subsistence category. Examples include laundry, phone calls home or
newspapers. You are allowed to claim £5 per night in the UK or £10
per night overseas for out of pocket expenses, whether you incur them
or not. Just make sure you don't claim them again if they are on the
hotel bill. You should also make sure you don't claim for disallowable
items such as minibar, pay-per-view movies or drinks at the public bar,
although you can claim for drinks ordered with meals as part of normal
subsistence.
PARKING PERMITS
You can get your company to pay for parking your own car at or near
your place of work tax free so long as it is within a reasonable distance
having regard to the nature of the locality. The exemption also applies
to vans, motorcycles and bicycles.
The words “at” or “near” are not defined in the legislation so there are
no set distances. You can even claim this exemption if there is a car
park nearer to your place of work.
A parking permit issued by your local council usually specifies certain
zones within a particular area so there should be no dispute as to
whether it entitles you to park further away. There is also no
requirement that the exemption only applies to normal working days so
weekend parking is not excluded. However, if you work from home you
would probably not get away with claiming this as it would be seen to
have a private motive.
You should also note that The Transport Act 2000 entitles local
authorities to levy a charge on employers for workplace parking,
although this only applies to land actually occupied by your company
and is not payable by the employee.
OFFICE FURNITURE
All home offices need furniture of some kind and if you stick to items
with an obvious business use such as desks, swivel chairs and storage
units there can be no suggestion that they are for personal use, even if
you do use the office for domestic reasons too. As with computers,
personal use is not taxable provided it is insignificant. Many people
have a home office now even if they are not in business, so you can
save tax buying furniture and other items for it that you probably would
have bought anyway such as carpets, potted plants and window blinds.
However, be careful with antique furniture or anything that could be
seen as having more of a domestic purpose than a business one, such
as drinks cabinets, paintings or television sets.
SUBSCRIPTIONS
Employees are allowed to claim for professional subscriptions against
tax provided they are relevant to the job, so there is no argument about
getting the company to pay for these as tax free expenses. Non-professional
subscriptions such as membership of clubs and societies
are a bit trickier, but provided there is a business connection you
shouldn't have any trouble putting these through the books. You can
claim for seminars and conferences, annual functions of trade
associations and membership of any organisation that provides some
kind of added value to your business. However, it is always best to get
invoices in the name of the company rather than you.
PUBLICATIONS
Trade journals and magazines relevant to your business are also
acceptable trading expenses and can be claimed as tax free
reimbursements if you buy them personally. Usually it is best to have a
subscription in the company name to avoid any dispute provided that there is a business use for the title purchased. We even had a client
who was granted permission to claim for daily newspapers on the
grounds that he used them for training purposes in his marketing
business.
INSURANCE
Most businesses require office insurance including employer's liability
cover if you have more than one employee (including yourself) but you
can also claim for personal insurances if they are related to the
business. Examples include professional indemnity insurance, cover
for the loss of key personnel and cover against tax investigations. It is
always best to have such insurances in the name of the company to
avoid dispute.
You could also claim for the extra premium on your private motor
policy if you are obliged to add business use to social, domestic and
pleasure. As this is potentially a benefit-in-kind you would have to
declare it on your tax return (and P11D) but you could then claim it all
back again as an expense that was necessary for the performance of
your duties.
MEDICALS
Health insurance is definitely a taxable benefit so no scope for any tax
savings there, but the Revenue have conceded that health screens are
tax free provided that they are ordered by the employer (make sure the
bills are in the company name) and undertaken for the sole purpose of
checking that you are fit to do your job. Follow-up health care is
taxable though so make sure you don't combine the two.
EYE TESTS
Eye tests are tax free as they are necessary for determining whether you have the ability to do your job without wearing new glasses, especially if you do a lot of computer work. Just ask the optician to put the bill in the company name. You can't claim for spectacles or contact lenses as well though because you would need these for personal reasons too.
FLU JABS
Many large employers offer their staff free flu jabs during the winter
months and these are tax free as they are both trivial benefits and a
valid trading expense (obviously it is advantageous for any business to
cut down on sick leave) so there is no reason why your company
cannot do the same if you are self-employed. Just ask the health
centre to put the bill in the company name. The same goes for malaria
tablets if you are travelling to a tropical country on business, although
that must be the main reason for going, not if you have booked a
holiday there.
