What to claim for / benifts

[Jamesw]

Hi, I'm new to contracting so please bare with me. I have set up my own ltd company and was wondering except for the normal expenses that I can claim back, what other benefits can I claim get whilst running my own business.

Also is there any benefit putting my wife down as a partner of the company. I see from other posts within the forum that other people do but its not to clear as to why ?

Thanks in advance..

James

[northernladuk]

If you are going to run a business you are going to have to learn how to read the basics and how to carry out a bit of basic research. This is all over the place. There are link on the right containing it, your accountant (you have one right) will issue you with a guide, there are a million threads on here if you use the search covering everything you can possibly think of and of course there is Google...

They put their partners down as a thinnly veiled way to legally avoid tax. Far too complex for you for the moment. Get the basics of your company understood first.
Enjoy...

[malvolio]

Hi, I'm new to contracting so please bare with me. I have set up my own ltd company and was wondering except for the normal expenses that I can claim back, what other benefits can I claim get whilst running my own business.

Also is there any benefit putting my wife down as a partner of the company. I see from other posts within the forum that other people do but its not to clear as to why ?

Thanks in advance..

James

Sigh...

Standard answers:

1. Read the first timer guide on this website

2. Download and study the PCG's Guide to Freelancing on www.pcg.org.uk

3. Ask your accountant

4. When you understand the basics, then ask questions.

Specific answers:

1. Who knows. It's your business, you know what you're spending.

2, Any benefits you like. It's your money

3. Depends if she's earning and what she's doing.

HTH.

[v8gaz]

They put their partners down as a perfectly legal, and tested in court way to avoid tax. Far too complex for you for the moment. Get the basics of your company understood first.
Enjoy...

FTFY

[TimCaprica]

Wholly and exclusively

Hello,

The technical and confusing answer is you can claim expenses on anything that is incurred "wholly and exclusively" for business. Clearly that is pretty vague. The sort of things I would expect you to claim are:

1. Travel costs
2. Some home costs
3. Any purchases you make on behalf of a client
4. Stationary
5. Accountant costs
6. Your salary - even though you are going to pay yourself mostly dividends it is worth paying a salary too. Your accountant will explain.
7. Legal costs (though not incorporation fees!)
8. Computer costs - through capital allowances

Things you definitely should not be claiming are costs for suits (or any clothes), drinks or anything else that might be considered 'entertainment'.

It may be worth putting your wife down as a partner if you expect to be a higher rate tax payer and she isn't. Then when you pay yourself in dividends she will get some of them so you can structure it so that you both have to reach the threshold for being higher rate tax payers before anyone pays a higher rate. I'm not aware of any significant advantage aside from that.

As others have said you probably should have an accountant as there are lots of things IT contractors need to worry about, such as IR35. You can find my details (Caprica Online) and plenty of other accountants on the Contractor UK accountant directory. I'd be very happy to discuss anything with you by phone/email.

[SallyPlanIT]

[*]Some home costs (I wrote a blog post about that here)

HMRC rules for "home costs" are not the same for service companies, which changed in 2005/6

Home is the workplace

Home working expenses that you wholly, exclusively and necessarily incur in the performance of your duties and which exceed the HMRC allowable £3 per week may be allowable against corporation tax providing you can prove that the home is a workplace because the following conditions have been met:


The duties are substantive duties for the employment.

No suitable client premises are available at the client or the premises are closed.

The duties cannot be performed without the need for suitable home premises.

There has been no preference of choice made by the employee as to where the duties are performed.

Expenses that qualify

Eligible expenses are those that have been incurred above what would normally be charged for general living costs, including:

units of gas
units of electricity
units of water for metered water only
business insurance
business telephone calls
dedicated business internet connection
dial up broadband (dongle)
business rates if applicable.


Expenses that do not qualify

The following expenses are generally a fixed flat rate fee that has to be paid irrespective of whether a business is carried out from home:

council tax
water rates
rent
mortgage interest or capital repayments
landline telephone line rental
household broadband connection rental.
Prior to 2005/06, council tax, mortgage interest and rent were allowable.

[kaiser78]

HMRC rules for "home costs" are not the same for service companies, which changed in 2005/6

Home is the workplace

Home working expenses that you wholly, exclusively and necessarily incur in the performance of your duties and which exceed the HMRC allowable £3 per week may be allowable against corporation tax providing you can prove that the home is a workplace because the following conditions have been met:


The duties are substantive duties for the employment.

No suitable client premises are available at the client or the premises are closed.

The duties cannot be performed without the need for suitable home premises.

There has been no preference of choice made by the employee as to where the duties are performed.

Expenses that qualify

Eligible expenses are those that have been incurred above what would normally be charged for general living costs, including:

units of gas
units of electricity
units of water for metered water only
business insurance
business telephone calls
dedicated business internet connection
dial up broadband (dongle)
business rates if applicable.


Expenses that do not qualify

The following expenses are generally a fixed flat rate fee that has to be paid irrespective of whether a business is carried out from home:

council tax
water rates
rent
mortgage interest or capital repayments
landline telephone line rental
household broadband connection rental.
Prior to 2005/06, council tax, mortgage interest and rent were allowable.

Oops - talk about getting the basics right !

[v8gaz]

Don't forget the Xmas party

[northernladuk]

Things you definitely should not be claiming are costs for suits (or any clothes), drinks or anything else that might be considered 'entertainment'.

Not quite. You can calim £140 per employee head per year for an xmas do or something similar

[Martin at NixonWilliams]

Hello,

The technical and confusing answer is you can claim expenses on anything that is incurred "wholly and exclusively" for business. Clearly that is pretty vague. The sort of things I would expect you to claim are:

1. Travel costs
2. Some home costs (I wrote a blog post about that here)
3. Any purchases you make on behalf of a client
4. Stationary
5. Accountant costs
6. Your salary - even though you are going to pay yourself mostly dividends it is worth paying a salary too. Your accountant will explain.
7. Legal costs (though not incorporation fees!)
8. Computer costs - through capital allowances

Things you definitely should not be claiming are costs for suits (or any clothes), drinks or anything else that might be considered 'entertainment'.

It may be worth putting your wife down as a partner if you expect to be a higher rate tax payer and she isn't. Then when you pay yourself in dividends she will get some of them so you can structure it so that you both have to reach the threshold for being higher rate tax payers before anyone pays a higher rate. I'm not aware of any significant advantage aside from that.

As others have said you probably should have an accountant as there are lots of things IT contractors need to worry about, such as IR35. You can find my details (Caprica Online) and plenty of other accountants on the Contractor UK accountant directory. I'd be very happy to discuss anything with you by phone/email.

Hi Tim

I'm not trying to be pedantic here but incorporation costs and genuine entertaining costs can be put through the business.

They do not attract corporation tax relief (which may be the point you were alluding to) but it is still beneficial to put these through compared to paying them personally out of taxed income.

You can also claim up to £150 per head per employee/partners for annual events as others have said.

Martin