Contractor start up expenses that can be claimed

This article was written by David Colom of Platinum Umbrella the executive management and payroll umbrella service for premium contractors.

Introduction

We have discussed the valid expenses you can claim whilst contracting. However, when you first form your own limited company you will incur some starting up expenses on which you can claim tax relief.

This article describes those expenses and what can be claimed.

Formation Expenses

There are 3 options for formation:

1. Deal with Companies House directly by yourself - £30.
2. Use a Formation agent - £45.
3. Use an accountant - from £150.

These are discussed in more detail in Setting Up a Limited Company.

Pre Trading Expenditure

Any valid expenses you can claim whilst contracting that are incurred in anticipation of your trading can be claimed, as if they have been incurred on the first day of trading. These might include:

• Travel
• Printing of Stationery
• Reference Materials / books.
• Trade Body Subscriptions.
• Advertising.
• Web site production and hosting fees.
• Legal Fees (perhaps for contract drafting or review).

Equipment and Other Capital Costs

All associated equipment can be charged to the company if the equipment can be justified for use in the company’s trade. These would include things like computer hardware and software, office furniture, telephone, PDA, etc. They can be sold from personal ownership to the company.

Business Insurances

The following are claimable:

• Public liability insurance policy – essential for your business.
• Employee liability insurance policy - required by law.
• Professional indemnity policy – optional to cover any specific risks.

Office Costs

Any costs associated with setting up an office for the company.

Published: Friday, June 13, 2008