Communications costsīusiness communication costs are allowable expenses – these include telephone lines, call charges, stationery, printing, photocopying, broadband lines, and so on. If a director or a member of staff of a contractor limited company is sent on a training course which better equips the company to be more competitive or which imparts new knowledge to an employee or employees, training is 100% allowable if paid by the company or paid by the director who is then reimbursed by the company. For example, protective clothing on a building site or within a chemical factory is permissible however clothes that can be worn for work and for leisure are not. Only clothing which is used “wholly and exclusively” for the purposes of business or a staff member’s employment is allowable.

If a company buys a capital item on hire purchase or if the company leases a capital item, then the amount paid in interest and on the lease part of any payments counts as “revenue expenditure” meaning that it can be used to reduce corporation tax. Note – capital allowances for cars and vehicles depend on CO 2 emissions Capital expenditure – on lease or hire purchase Note – the capital allowance will be increase for 2 years from 1 January 2019 to £1,000,000

Capital items include office furniture, cars, computers, tools, software, and more – items which have a long-term usefulness for the purposes of trade.Ĭapital items bought for a limited contractor company must only be used for business reasons and not for personal reason (for example, a laptop).Īll capital expenditure under £200,000 may be listed as “revenue expenditure” on financial accounts meaning that the total value of the items reduce the level of profit made, thereby reducing any resulting corporation tax obligation. This is called the Annual Investment Allowance. Capital allowances for contractors – purchased itemsĪll sole traders, partnerships, and limited companies (including contractor limited companies) may spend up to £200,000 on capital items.

Limited company contractor expenses