Upon joining a Limited Liability Partnership (LLP), members may become eligible to claim tax relief on certain expenses incurred personally but which are used for business purposes. What expenses can be claimed is down to the management policy of the LLP, so you should ask your HR or finance contact for advice on what you can claim. Please note that LLP members cannot claim expenses on their self-assessment tax return in the way that self-employed people can; all expenses must be included in the LLP accounts.
Some allowable expenses for partners are listed below…
HOME OFFICE EXPENSES
If you regularly work from home, you may be able claim a proportion of your household running costs. We usually recommend claiming the equivalent of one room’s worth of costs with the exception of kitchens and bathrooms. So, if for example your house had 3 bedrooms and one reception room, one quarter of household running costs would be claimed. If your home is rented, then a proportion of the monthly rental expense would be used in the calculation, if you own your home then a proportion of the mortgage interest element should be used.
Other costs that can be claimed include:
- Utilities such as gas, electricity and water
- Council tax
- Broadband and home phone
- House insurance
If you use a car or motorbike for business related travel, then it is likely that you will be able to claim a proportion of your motoring costs as a business expense. There are two methods (‘Actual cost’ and ‘Simplified expenses’) available to calculate the costs involved, however, once a method has been chosen for a specific vehicle it cannot be changed until the vehicle is replaced. We would always recommend using the Actual cost method.
The Actual cost method is, as the name suggests, where you record all the costs related to the running of the vehicle such as fuel, servicing, repairs, insurance, road fund licence, breakdown membership etc.
These costs are collated, and a dis-allowance is made for private use. This is more time consuming from the point of view of recording and accounting for all associated expenditure, so a decision must be made as to whether the associated administration involved provides a benefit that outweighs the use of the simplified expenses method.
With the Actual cost method, capital allowances are claimed on the car which allows the recognition of the cost of the car over a certain period of time. These time scales are set by HMRC and vary depending on the type of car.
Vans and motorbikes are normally eligible for Annual Investment Allowance (AIA) which means that the full cost of these vehicles can be claimed in one year. It is also possible to claim tax relief for interest on any loan specifically used to purchase your car or van, although, as with other motoring expenses, this will usually need to be adjusted to reflect an element of private use.
travel and subsistence
In addition to motor costs, other travel costs such as parking fees, tolls and congestion charges, train and bus travel can also be claimed if these relate to business trips. Food and drink or subsistence costs can also be claimed where they are incurred through the course of normal business. For example, if you make a business journey outside of your regular working pattern or if you regularly work in different locations then these costs are usually considered allowable expenses. Equally, where you undertake a business trip which requires you to stay away from home, the accommodation and reasonable subsistence costs will usually be tax deductible.