One of the best ways of saving money and planning your finances as a small business owner is by moving various legitimate expenses over to your company books. Beyond the ‘obvious’ expenses, such as fuel mileage and items purchased for your business through the Director’s Loan, there are several other opportunities to reduce your personal outgoings and take advantage of potential tax breaks.
Here’s a quick breakdown of four expenses you might consider moving to your company books:
1. Mobile Phone
A mobile phone contract in your company name is a straightforward way to save money each month. If you use your phone primarily for business purposes, the expense is fully tax deductible, meaning the cost of the phone handset, your contract, and any business-related data usage or calls can be covered by the company and offset against your taxable profits. Currently, HMRC does not treat a company mobile phone as a taxable benefit if it is provided to an employee (and that includes you, as director), meaning there is no additional personal tax liability for having this expense on your company accounts.
2. Gym Membership
If you are a member of a gym, paying for your gym membership through your company books can save you some money, although there are tax considerations to bear in mind. If your business covers the cost of gym membership for yourself or one of your employees, it will be treated as a taxable benefit in kind.
This means it won’t be entirely tax-free, but you could still save money overall. How? Because the membership cost still counts as a business expense for your company, which can reduce your corporation tax bill, even though you’ll pay some income tax on the benefit personally. If you’re in one of the higher tax brackets, this can work out cheaper than paying for the gym membership out of your own account. However, do speak to your accountant about how this could impact your specific tax circumstances and decide if it’s worth putting on the company books.
3. Health Insurance
While private health insurance is also considered a taxable benefit by HMRC, it can sometimes be more cost-effective on the company than paying for it through your personal income. By charging your health insurance to the company, the company can deduct the cost as a business expense, potentially reducing your overall CT liability, although it’s always best to check with an accountant if you are unsure.
4. Meals and Hotels (Work-Related-Only)
If you travel for business, stay overnight, or entertain customers as part of your work, meals and hotel stays are counted as legitimate expenses that can be moved to your company books. However, to qualify, the expenses must be directly connected to business activities, such as attending a conference, meeting, or other work-related activity.
HMRC considers meals as a ‘subsistence expense’ for tax deduction purposes when you’re travelling for work, and accommodation costs incurred during business trips are also deductible. Please keep detailed receipts and note the purpose of each expense to maintain compliance.
What Next?
A lot of small business owners miss out on legitimate expenses they could be charging to the company, so that they pay more tax than they need to. Don’t be one of them – for expert advice on how to manage your tax and expenses, please get in touch with the knowledgeable team at Vanilla Accounting today by clicking here.
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