CONTRACTING EXPENDITURES: WHAT CAN YOU CLAIM?
JPC FINANCIAL LIMITED
FINANCIAL LIMITED
THE COMPLETE BUSINESS MANAGEMENT SERVICE

ALLOWABLE

COMMENTS

NOT ALLOWABLE

COMMENTS

Contractor’s gross salary

  

Private/domestic expenses

  

Spouses salary -

If actually paid and not unrealistic having regard to duties performed

Personal pension contributions -

Unless paid by the company.

Company NI Contributions

  

Entertaining Expenses

  

Company Insurance and -

Executive Pension Contributions

Where paid to an Inland Revenue approved Scheme

Political/Charitable Donations

 

Travel Expenses -

Incurred in travelling to contracts (in certain circumstances).*

Fines

  

Motor Expenses -

Incurred in running a motor vehicle for business purposes.*

Clothing -

Except for protective or safety clothing.

Accommodation & Subsistence -

Whilst on contracts (in certain circumstances).

Capital Equipment -

Dealt with by reference to Inland Revenue rules on Capital Allowances.

Printing/Stationery/

Postage

  

Private Medical and Insurance Costs

  

Telephone -

Business proportion of call charges.

    

Books/Magazine Subscriptions -

Business related

    

Bank Charges and Interest -

On company bank accounts

    

Computer Consumables

      

Audit and Accountancy

  

NB: The above lists are not exhaustive, but are intended to give a general idea of the treatment of certain expenses.

MOTOR EXPENSES
Company Cars
In many cases it will still be beneficial for the contractor to lease hire or purchase a new car through his company, or to sell his existing car to the company. Although most contractors seldom use their car on company business, the cost of the Benefit in Kind and Fuel Scale Benefit charged by the Inland Revenue is still more than offset by the benefit of charging all running costs and capital allowances to the company. The full impact of the company car benefit regime should be discussed with a financial adviser.
Private Cars - Mileage Allowance
In some cars where extensive business mileage is envisaged, it may prove beneficial to own a private car and charge the company for the use of the car on business purposes. Current mileage rates vary from 28p to 63p per mile for the first 4000 business miles reducing to 17p to 36p thereafter.

The best approach will be discussed at the initial meeting.

USE OF HOME
An allowance may be tax deductible in respect of use of home as office, but this may have Capital Gains Tax implications on the eventual sale of your home, so you should consult your financial adviser in this respect prior to any claim being made.
COMPUTER EQUIPMENT, CARS, FIXTURES AND FITTINGS
Capital Allowances for capital expenditure are generally available, provided that the asset is used for business purposes, at the current rate of 25% per annum on a writing down basis. For the 2000-2001tax year 100% allowances are available for items such as computer equipment (but not cars!)

On motor vehicles this is restricted to a maximum of £3,000 per annum.

NATIONAL INSURANCE AND CARS
If you are unaware of or unsure about the new National Insurance implications of company car benefits, you should consult your financial adviser. These provisions came into effect during 1992/93. National Insurance contributions are payable at the prevailing rate for employer contributions (12%) against the car and fuel scale charge benefits assessable each year, paid in arrears.