12 Tax Saving Tips for your Limited Company
Use Of Home As Office Claim
If you do any work from home, your company can repay you for some of the costs associated with running the business from home. Contact us for full details on what can be claimed.
There are two options:
- Fixed Basic Allowance
You can currently claim up to £6 per week (or £26 per month) without having to itemise or justify the costs to HMRC. This basic allowance is designed to acknowledge you writing up business notes, invoices and general ad-hoc administrative tasks at home.
- Apportioned Cost
If you work from home at least one full day per week, and have dedicated office space in your home, you may be able to claim a proportion of your household bills.
The amount you can claim will depend on:
- Area: What proportion of the area of the house is used for business?
- Usage: How often do you use the area for business and how long for?
- Costs: What costs can you attribute or apportion to this business usage?
The costs you can proportion are mortgage interest (excluding repayment element), rent, water, gas and electricity. You may also be able to claim a proportion of your landline and broadband costs.
If you choose to use the apportioned method, you’ll need to ensure you can prove that you have a workspace that’s used just for business. You’ll also need to be able to provide evidence of your calculations to a HMRC inspector, if requested.
Please contact us if you need help to calculate this and we can provide you a template to use.
Annual work events for employees can be tax deductible providing all rules are met. See our detailed guide here Are employee parties tax-free? – Dawes Accountants
One off gifts to employees (including directors) can be tax deductible and a tax free benefit for the employee, if all rules are met. See our detailed guide here Tax Free Christmas Presents – Dawes Accountants
Personal Mileage claim
If you incur mileage in your personally owned vehicle (or Bicycle) doing business on behalf of your company (excluding Home to work) you can reclaim set amounts based on the type of vehicle and number of miles incurred. See current HMRC mileage rates here Travel — mileage and fuel rates and allowances – GOV.UK (www.gov.uk)
Employer Pension Contributions
The company as Employer can make Pension Contributions on your behalf into a Pension Scheme. These count as tax deductible expenses for the company. Annual limits do apply so please check with us before making any contributions.
130% Super Deduction for New Asset Purchases
Until 31 March 2023, your purchase of Brand New Assets could qualify for 130% tax relief. See full rules here Super-deduction – GOV.UK (www.gov.uk)
A company can pay for Mobile Phones for all its employees, including directors. So best to ensure your contracts are in the Company name and paid for by the company.
If the clothing, you purchase is branded with clear company logo this makes it tax deductible and your company can pay for your work clothes.
Even after recent changes to tax rates, electric vehicles can still be a very tax efficient way for your company to purchase your personally used vehicle. See more here Should I get an electric car? – Dawes Accountants
Pension Salary Sacrifice
Offering a Salary Sacrifice scheme for Pensions to your employees can be a great way to save both your company and your employees national insurance taxes. Contact us for more details on how to operate a sacrifice scheme.
Gifts which are branded with advertisement for the company are tax deductible if they are under £50 in value and they are not food, drink, tobacco, or a voucher exchangeable for goods.
Any money (or other qualifying donation Tax when your limited company gives to charity: Overview – GOV.UK (www.gov.uk)) given to registered Charity will qualify as a tax deductible expense for your company.
Bonus tip – Relevant Life insurance / Keyman Insurance
Certain types of life insurance are tax deductible and come with no personal tax benefit in kind. These can be taken out for any Director or employee. Be careful to take out and get advice on the type of policy as others will not be tax deductible and could mean a personal tax benefit in kind arises. Speak to us and get advice from an insurance specialist to ensure you take out the correct policy.
If you have any questions on any of the above tax saving tips please do not hesitate to contact us. Contact – Dawes Accountants