The rules for allowable business expenses are generally similar for limited and unlimited companies, with some subtle exceptions. Where there are differences  – these are identified in the guide below.
Lease payments See operating leases – Expenses – O is for …  

Legal and professional fees

  • If you require the help of a solicitor and if their service is related to the trade of the business then the expense is allowable.
  • Professional fees such as business coaches or consultants are also allowable so long as their service relates to the trade of the business.
  • If the cost relate to the purchase of  capital equipment, then the costs need to be capitalised along with the capital expenditure.
  • If you are paying for legal work to raise capital or drawing up shareholder agreements, then these costs are disallowable as it is the director or shareholder who benefits, not then company. The company can still pay the charge and report it in their accounts – but the cost is disallowed when it comes to calculating tax at the end of the year.

 

Long-service awards

  • For service in excess of 20 years, awards consisting of assets or shares in the employing company with a maximum value of £50 for each year of service (up to 20 years) can be made to staff without a tax charge.
  • Where the award is made in cash , an assessable benefit will arise for all employees. Relevant employees will also be assessable where an award is made in the form of an asset or other non-cash benefit and the value exceeds the maximum.
Lunch

  • Generally not allowed if you are at your normal place of work – this has duality of purpose as you need to eat to survive and is disallowed by HMRC.
  • Lunch expenses are allowed if you are away from your normal place of work and the expense meets the rules for subsistence.

See: Food for thought. Can I claim for that meal or not?

We hope you find this series on expenses helpful. Please take a moment to check out our other articles.

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