• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Basic expense claiming

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Basic expense claiming

    Hi all,

    I'm thinking of starting contracting. I have decided to start a limited company. I have read what expenses I could claim but what I don't understand is how much of it comes off my corp tax bill and therefore HMRC pay for it? Or am I way off?

    E.g.

    I pay £2000 for something
    I claim that back from my limited company
    Then does £2000 come off the limited companies corp tax bill? And therefore as I don't pay that £2000 to HMRC, it effectively means HMRC pay for it?

    Thanks for your time
    Danny

    #2
    Originally posted by itsmguy View Post
    Hi all,

    I'm thinking of starting contracting. I have decided to start a limited company. I have read what expenses I could claim but what I don't understand is how much of it comes off my corp tax bill and therefore HMRC pay for it? Or am I way off?

    E.g.

    I pay £2000 for something
    I claim that back from my limited company
    Then does £2000 come off the limited companies corp tax bill? And therefore as I don't pay that £2000 to HMRC, it effectively means HMRC pay for it?

    Thanks for your time
    Danny
    Hi Danny,

    No. Expenses do not work like that. Expenses are claimed against taxable income.

    Income, less Expenses = Profit. Corporation Tax is paid on profits. So you are saving the Corporation Tax on the £2000 that you would have otherwise had to pay (about 20% - £400) - which mean that your company pays £1600 for the 'something*.

    (*I'm not bothering with FRS VAT guys, let's get him on the first rung of the ladder at least...)

    I would recommend that you read up on contracting before you actually make the jump.

    You'll find a lot of answers to your questions within the CUK website.

    On the right you'll find CUK Navigation. >>>>>>>>>

    Look down and you'll come to the First Timers section. Have a read through there.

    Basic expenses questions answered here: http://www.contractoruk.com/expenses/

    Then pay particular attention to IR35.

    If you go into the Accounting/Legal forum you'll discover the thread Basic advice when running your own contractor business.

    Guide to Contracts also has some good articles.

    And finally - accountant recommendations
    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
    - Voltaire/Benjamin Franklin/Anne Frank...

    Comment


      #3
      Originally posted by cojak View Post
      Hi Danny,

      No. Expenses do not work like that. Expenses are claimed against taxable income.

      Income, less Expenses = Profit. Corporation Tax is paid on profits. So you are saving the Corporation Tax on the £2000 that you would have otherwise had to pay (about 20% - £400) - which mean that your company pays £1600 for the 'something*.

      (*I'm not bothering with FRS VAT guys, let's get him on the first rung of the ladder at least...)

      I would recommend that you read up on contracting before you actually make the jump.

      You'll find a lot of answers to your questions within the CUK website.

      On the right you'll find CUK Navigation. >>>>>>>>>

      Look down and you'll come to the First Timers section. Have a read through there.

      Basic expenses questions answered here: Contractor Expenses - How to claim Travel and other expenses via Limited Company or Umbrella

      Then pay particular attention to IR35.

      If you go into the Accounting/Legal forum you'll discover the thread Basic advice when running your own contractor business.

      Guide to Contracts also has some good articles.

      And finally - accountant recommendations
      Hi Cojak

      Thank you so much for explaining this. Makes sense now. And thanks for pointing out the links. Will do
      Have a great weekend
      Cheers
      Danny

      Comment

      Working...
      X