The question of expenses can be intricate. Different types of expenses have particular taxation implications. In general, expenditure that is incurred wholly and exclusively for the purposes of business is allowable for Corporation Tax. These expenses are deducted from your company’s income and have the effect of reducing taxable profits, thereby reducing the overall amount of tax payable.
Although expenditure may be incurred by the business, there may be an element of benefit to you, the company director. This will have personal taxation implications as these items are considered by the Inland Revenue to be a Benefit in Kind.
Examples of Allowable Expenditure may include the following items.
The full costs of meals while travelling or staying away on business is allowable as part of the cost of travel. Business travel includes travelling on business from home where the nature of your job requires you to carry out your duties at home, but doing work at home for convenience rather than because of the nature of the work does not mean that your home is a workplace.
You can claim the extra cost of the accommodation where you are meeting the running costs of your home and at the same time incurring rent or hotel costs in order to be near your workplace, because the workplace is not within normal daily travelling distance.
Removal and Relocation Expenses
Removal and Relocation Expenses may be claimed where there is a change in place or nature of your employment, the change is required because your old home is not within reasonable daily travelling distance, and is to a new home that is within reasonable daily travelling distance to the new workplace. Qualifying removal expenses and benefits are available up to a maximum of £8,000 per move, providing they are incurred during the period from the date of the job change to the end of the next following tax year. Allowable expenses include disposing of the old property - legal and estate agents fees, and buying another property - survey fees and stamp duty, removal expenses, providing replacement domestic goods, travelling and subsistence and bridging loan expenses.
Any payments received in compensation for a fall in value of the old home does not qualify as a relocation expense and is fully taxable as earnings.