Common expenses questions answered

At our last Lunchtime Live event, our Chief Accountant Emily Coltman answered your questions about claiming tax relief on small business expenses in the UK. If you missed the live Q&A, just watch the video below to find out about claiming expenses for everything from travel to insurance. To jump the video to a specific question and answer, just select the questions below.

General

Why are expenses so important?

What is the difference between claiming expenses as a sole trader and if you're the director of a limited company?

Food and drink

When could I claim expenses for a cup of coffee?

Is there a limit on the amount spent on business trips on restaurant and hotel expenses?

I’m a sole trader contracting for a company in London. Can I claim for lunch meals?

Entertainment

How does client entertaining count if you're a limited company?

My wife is a shareholder, but not a Director of my company. Would she still be eligible for staff entertaining?

We are an alcohol business. When we organise tastings and open bottles for free how do we have to charge?

As a limited company can I take employees out (and not clients) and claim this? I thought it was only Christmas that you could do this.

Travel and mileage

When director is non-resident (living abroad), what kind of travel expenses can be claimed (for a UK registered business with trading address in UK)?

We are a limited company and I have never claimed any petrol/travelling expenses over the past few years. Can I make a retrospective claim without receipts - i.e. list the journeys and apply mileage?

I own a Ltd Company and have been claiming mileage, train and parking for years. Recently a colleague said I couldn’t, as my place of work is not temporary. I've checked HMRC website and it says any contract less than two years is classed as temporary. Can you please clarify?

What are the rules for restaurants during a business trip (meet client, prospects or distributors)?

How does VAT on travel expenses work regarding hotels (inside UK and outside)?

Is there a section on FreeAgent to enter fuel and travel expenses? What is the rate per mile also

My primary mode of transport to and from clients is bicycle. I claim travel expenses at the rate of 20p per mile. I have recently purchased a new bike for work purposes. Can I declare this purchase as a company expense?

I cycle to work and use a dedicated cycle gym for a shower and change of clothes near my place of work. I also get my office shirts laundered. Can this be claimed as business expense?

I'm the Director of a Ltd company living and working in London. When I visit a client I normally travel by tube. The journeys are charged to my Oyster card on a PAYG basis. How do I calculate how much I can claim and what proof would I need?

I am currently on a 3 month contract, working 4 days a week at their premises. Am I able to claim the 20p per mile for travel to and from their premises?

Business use of home

I run a limited company and am currently using my home address as the office. Can I claim rent on my expenses?

As a director, I work from home about 80% of the time. I occasionally spend 2 or three days at a time working for a client at their site. Can I claim sustenance?

If I claim a portion of the interest part of my mortgage will I be charged capital gains tax if I sell my house and make a profit? If so at what rate?

I am a student running a limited company while still in University and most of the work I do is from my room, what type of expenses can I claim?

Expenses in foreign currencies

I have a lot of expenses in foreign currencies which are automatically exchanged into GBP in FreeAgent. Is the rate applied in FreeAgent ok for the taxman?

I pay my expenses in foreign currency and until now, the company reimburses me in GBP. Is it possible to get the money back in a foreign currency?

Computer equipment and software

If buying or renting software which has 50% business and 50% personal use, is it worth claiming it as an asset or is it classed differently? Much of this software is subscription based, how do our expenses fit in with this payment method?

I purchased a laptop a couple of weeks ago using my personal account. Can my company buy the laptop from me at the price I purchased it? And do I need to produce paperwork (invoice, receipt etc.)?

Mobile phones

I have a limited company. Previously mobile phone expenses were split 50:50 between business and personal use. Is this still the case?

What are the rules on mobile phones? Can I claim for an upgraded phone so I can access my business emails 24/7, and if so what percentage?

Insurance

As a Sole Trader, is your general Health Insurance an expense?

As a sole trader, I’ve heard that Income Protection Insurance is tax deductible. Should this be put into your books in FreeAgent as an expense - or is it a separate field on your tax return and shouldn’t be in as an expense?

Other

Can my business suit (and by extension dry cleaning?) be accounted for expenses? I work in PR, so I represent companies when dealing with media on face to face and for product launches.

I am a sole trader and on occasion I have made personal, one off charity donations. Can you clarify how I should go about claiming [Gift Aid](/glossary/gift-aid/) on these donations?

Should a Sole Trader record their pension in FreeAgent books?

Can we claim for start up costs before the business was incorporated (purchase of stock and stationary etc.)?

As a sole trader, can I claim money I’ve paid for hiring other sole traders or companies and are there limits to that?

When can you claim tax relief on animals?

How are bank charges handled, are they taxable?

I will have a non-paid intern this summer and will provide her a sim card and prepaid Oyster card. How this can be charged?