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Our previous blog looked at working from home expenses for the self-employed which you can read here . For limited companies it’s a little more complicated as the company is a separate legal entity. There are three options for claiming: The fixed rate allowance As a director, you can claim £6 per week from the company for working from home costs which is an allowable expense for the company against corporation tax and it is not chargeable to income tax for you. However, you can only claim this if the company does not have a business premises. Actual costs You can claim a proportion of your costs including gas, electricity, water, telephone and internet. You’ll need to use a reasonable method of dividing your costs, for example by looking at the number of rooms you use for your business and the time that you spend working from home. Unlike for the self-employed, you cannot claim a proportion of rent, mortgage interest or council tax as these are considered to be fixed costs and don’t increase as a result of working from home. It’s important to keep records of the costs and the method used to divide the costs in case HMRC asked to see it. Rental agreement The other option is that you can charge your company rent to use part of your home. You would need to put a rental agreement in place that is signed by both parties and is at a commercial rate. The company then pays you rent at the agreed rate and this is an allowable expense in calculating your company profits. The rent that your company pays is rental income for you personally and needs to be declared on your personal self-assessment tax return. Ideally the income will be eliminated by the actual costs incurred and therefore no tax will be payable but it will still need to be declared. Other points to consider if you’re looking at the rental agreement option: You may need to check any rental agreements or mortgages to ensure that you’re allowed to run your business from home. You should check if there is any effect on your home insurance policy. There may be capital gains tax payable if you use part of your home solely for business purposes. You should check that your home would not become subject to business rates. Important points to remember for claiming working from home expenses Keep accurate records - document all expenses, including how you calculated business use. Only claim for business use - HMRC is strict about claiming only the portion of costs genuinely associated with business activities. Review your claims annually - as your working pattern and expenses may change, it’s worth reviewing your home working claims each year to ensure they are still accurate. Need help? Get in touch Navigating home working expenses can be complicated, especially with changing HMRC rules. We can help you ensure you’re claiming the maximum allowable expenses.

There are two options for claiming: Proportion of actual costs You can claim the business proportion of your costs for things like: Gas and electricity Water Council tax Mortgage interest (not the capital repayment) or rent Internet and telephone You’ll need to use a reasonable method of dividing your costs, for example by looking at the number of rooms you use for your business and the time that you spend working from home. It’s important to keep records of the costs and the method used to divide the costs in case HMRC asked to see it. Also note that if you have rooms that you use solely for your business, this may effect your eligibility for private residence relief where you own your home so it’s a good idea to also have personal use of the rooms if possible. Simplified expenses You can avoid the complex calculations above by using simplified expenses which is a flat rate based on the number of hours you work from home each month. You do not need to prove any costs to HMRC as they have set the rates, although you may be asked to justify the number of hours if HMRC believe them to be inflated. The current rates are as follows: 25 to 50 hours £10 per month 51 to 100 hours £18 per month 101+ hours £26 per month Each month should be calculated separately so if you take a holiday one month, you may need to claim a lower amount that month. Conclusion Make sure that you’re making a claim for your home working as it will reduce your tax bill. Contact us if you’d like any help with your self assessment tax return.

Income Tax, Personal Allowances and Employee National Insurance The Chancellor has opted to freeze income tax thresholds again, extending the freeze on personal allowances and higher-rate tax thresholds until 2028. This move means that, as inflation pushes wages up, more people may find themselves in higher tax brackets over time. There is no change to employee national insurance rates. National Minimum Wage (NMW) From April 2025, NMW will be increasing to £12.21 per hour for eligible employees, with the rates for 18-20 year olds increasing to £10.00 per hour and under 18s and apprentices to £7.55 per hour. Employers must make sure they are meeting these minimum rates. Employer National Insurance Contributions From April 2025, the main rate of employer national insurance (NI) will increase from 13.8% to 15% and the threshold at which contributions begin will reduce from £9,100 to £5,000 per year. For an employee earning more than £9,100, this is an increase in NI of at least £615 per year. The impact of this on small businesses has been reduced with an increase in the employment allowance from £5,000 to £10,500 per year. The employment allowance is a reduction in employer NI contributions. The employment allowance is currently only available to employers with less than £100,000 of employer NI contributions in the previous tax year but this restriction will be removed from April 2025. However, those companies with only one employee paid above the NI threshold where that employee is a director are not eligible for the employment allowance so this will affect many small consultancy businesses. Corporation Tax The government has published a Corporate Tax Roadmap that includes a commitment to cap the corporation tax main rate at 25%, maintain the small profits rate and marginal relief, maintain full expensing and annual investment allowance for capital purchases, and R&D relief rates. The Roadmap also shows that there is an intention to simplify tax administration for companies. Capital Gains Tax (CGT) Changes to CGT were a major talking point prior to this year’s budget with the rates increasing from 30 October 2024 to 18% (previously 10%) in the basic rate band and 24% (previously 20%) in the higher/additional rate bands. This aligns the rates for other assets with the rates already in place for disposals of residential property. Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will increase from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026. The lifetime limit for IR has reduced to £1m which is in line with BADR. Stamp Duty Land Tax (SDLT) The higher rate charged on purchases of additional dwellings has increased to 5% (previously 3%) from 31 October 2024. For companies purchasing dwellings costing more than £500,000, the rate has also increased from 15% to 17%. The SDLT thresholds were already due to reduce from 1 April 2025 because the current thresholds were a temporary measure from September 2022 to 31 March 2025. Inheritance Tax (IHT) There are changes to agricultural property relief and business property relief from 6 April 2026 whereby 100% relief is only available for the first £1m of assets, reducing to 50% thereafter. Unused pension funds will be brought into the value of estates from 6 April 2027. The nil rate band will remain at £325,000 and residence nil rate band at £125,000 until April 2030. Non-UK Domiciled Individuals As previously announced, the remittance basis of taxation (where non-UK domiciled individuals could elect to pay tax only on their UK sourced income/gains and any remittances made to the UK) will be removed from 6 April 2025. Other Points Making Tax Digital (MTD) for Income Tax will be extended to the self-employed and landlords with turnover of more than £20,000, although no date has been given for this. You can read more about MTD in our previous blog . ISA subscription limits are frozen until 2030. The interest rate for unpaid tax will increase to 9% (currently 7.5%) from April 2025. There will be a focus on non-compliance with additional compliance staff being recruited at HMRC and a clear message about reducing the tax gap. We will likely see an increase in ‘one to many’ letters which HMRC send to individuals to prompt them to consider whether their tax affairs are up to date. Conclusion With a host of tax changes impacting both individuals and businesses, planning ahead is crucial. Whether you’re affected by the income tax freezes, NI rises or CGT increases, taking steps now can help you make the most of available reliefs and avoid potential pitfalls. If you’d like tailored advice on navigating the Autumn Budget 2024, don’t hesitate to reach out. We’re here to help you make the most of the new regulations, ensuring you’re well-prepared for the financial year ahead.

Legal Structure Self-Employed (Sole Trader) 
As a sole trader, you are the business; there is no legal distinction between you and your business. You are personally responsible for any debts, meaning that your personal assets are at risk if the business fails. Limited Company A limited company is a separate legal entity from its owner(s). This offers limited liability protection, meaning that in the event of financial trouble, your personal assets are safeguarded, and you are only liable for the amount you invest in the company. The company itself is responsible for its own debts and obligations. This also means that you cannot use the company as your personal bank account as it’s legally separate and so withdrawing money has tax consequences. Taxation One of the most important differences between being self-employed and running a limited company is how you are taxed. Self-Employed Tax 
As a sole trader, you pay income tax and national insurance through Self Assessment on your business profits. You are also required to pay Class 4 National Insurance Contributions (NICs). The tax rates are currently 0% for your personal allowance, 20% in the basic rate band, 40% in the higher rate band and 45% in the additional rate band. National insurance is 0% on the initial profits, 6% on the next section and 2% on the higher amount. Limited Company Tax 
A limited company is subject to corporation tax on its profits. The current rate for corporation tax in the UK is 25% for profits over £250,000, and a marginal rate for profits between £50,000 and £250,000. For profits below £50,000, the rate is 19%. These thresholds may be reduced if you have shares in other companies.
 You’ll be a director and shareholder of your limited company and can take income through a combination of salary and dividends. The salary is taxed on you at the income tax rates above and employee/employer national insurance will also be due, but there is corporation tax relief in the company. Dividends are taxed at lower tax rates but are taken from the net profits of the company so there is no tax relief. The fact that you can choose how/when to extract profits from your limited company is often the main reason people opt for running their business via a limited company. Expenses and Tax Deductions Self-Employed Sole traders can deduct allowable business expenses from their profits before calculating tax. These expenses must be "wholly and exclusively" for business purposes. See our previous blog post here for some examples. Limited Companies Limited companies can also deduct business expenses from their profits before calculating tax. The company can contribute to the director’s pension without triggering a personal tax liability (subject to the annual allowance) and also provide some small gifts and annual parties for employees (including the director). See our previous blog post here about trivial benefits. If any personal costs are covered by the company then there will be national insurance due for the company and personal tax due for the director so this should be discussed with your accountant. VAT Whether you're self-employed or a limited company, you will still need to adhere to the same VAT rules and register for VAT if you meet the threshold. Hiring Employees You can hire employees whether you're self-employed or a limited company. You'll need to set up a payroll scheme and follow the payroll processing procedures, as well as adhering to employment laws. Administrative Responsibilities Self-Employed The administrative burden for sole traders is relatively light. Sole traders must: Register with HMRC for Self Assessment. Submit an annual Self Assessment tax return. Maintain basic accounting records to show income and expenses. Making Tax Digital is coming which means that you may have to send quarterly submissions to HMRC, see our blog here about this. Limited Companies Running a limited company comes with more administrative responsibilities, including: Registering the company with Companies House. Filing annual accounts and a confirmation statement with Companies House. Submitting a Corporation Tax return to HMRC. Maintaining more detailed accounting records, as your accounts must follow certain legal requirements. It is advisable to have an accountant whether you are self-employed or running a limited company but particularly with a limited company as you must adhere to company legislation and your accounts must be prepared under certain standards. Perception and Credibility For some businesses, operating as a limited company can enhance credibility and trust with potential customers and suppliers. The "Limited" after a company name suggests that the business is more established and professionally managed. In certain industries, clients may prefer to work with a limited company due to the protection and formality it offers. Sole traders may find that certain larger companies or suppliers are reluctant to enter into contracts with them due to the lack of limited liability. Flexibility and Growth Potential Self-Employed Operating as a sole trader is simple and flexible, which can be advantageous for small businesses or freelancers with modest earnings. However, as your business grows, the lack of limited liability and tax advantages may become restrictive. Limited Companies If you plan to grow your business, hire employees, or seek external investment, a limited company is often the better structure. It provides scalability, greater flexibility in terms of ownership, and can make it easier to raise capital. However, it also brings greater complexity. Conclusion: Which Is Right for You? Choosing between self-employment and setting up a limited company depends on a number of factors, including your business size, growth aspirations, and personal circumstances. Generally: Self-Employed status is simpler, requires less admin, and is often suitable for small, low-risk businesses or freelancers. Limited Company status offers more tax planning opportunities, reduced personal financial risk, and is ideal for businesses aiming to grow and scale. You can always begin running your business as a sole trader and move to a limited company later on as you grow. Before making a decision, it's advisable to consult with an accountant to assess your individual situation and ensure you're making the most tax-efficient choice for your business. CJL Accountancy can help with looking at your personal circumstances so that you can make an informed decision.

What Are Trivial Benefits? A trivial benefit is a small gift or token of appreciation provided by an employer to an employee. This can include you as director of your limited company. The gift is allowable as a deduction for corporation tax purposes and there is no tax or national insurance charged on the employee. According to HMRC, for a benefit to be considered "trivial" and tax-free, it must meet the following criteria: it costs £50 or less (including VAT) per individual it isn’t cash or a cash voucher it isn’t a reward for their work (such as meeting a sales target) there’s no contractual entitlement to it For directors of a “close company” (a company controlled by five or fewer shareholders), trivial benefits are capped at £300 per tax year. However, for regular employees, there is no annual limit on the number of trivial benefits that can be provided, as long as each individual benefit is within the £50 threshold. Examples of Trivial Benefits Common examples of trivial benefits are: drinks for the office alcohol/chocolates/biscuits flowers gift cards that are not exchangeable for cash taking employees out for a meal to celebrate a birthday Pitfalls to Avoid While trivial benefits provide an excellent opportunity for tax savings, it’s important to ensure that all qualifying conditions are met. Common pitfalls include: exceeding the limit - even if the benefit is over £50 by a penny, it cannot be classed as trivial, the whole benefit becomes subject to tax and national insurance for the employee cash or cash-equivalent - if the voucher is exchangeable for cash, even if it’s a small amount, it will always be taxable performance-related - the benefits must not be linked to performance or be contractual Other Non-Taxable Benefits There are other benefits that you can provide to employees (or yourself as director) that are tax-free: annual staff parties up to £150 per person per tax year - such as a summer barbecue and Christmas party a mobile phone - must be paid for by the company rather than reimbursed contributing to a pension scheme car parking at the office Conclusion Trivial benefits are an excellent way for companies to incentivise employees while making small but impactful savings on corporation tax. By offering thoughtful, non-cash gifts to staff throughout the year, businesses can strengthen workplace culture and morale, all without adding to the tax burden of either party. It’s essential to keep detailed records of trivial benefits to ensure compliance with HMRC regulations and to maintain the correct tax position. If you’re looking for some further guidance on this then get in contact.

Claiming allowable business expenses will reduce your taxable profit, meaning you will only pay tax on the money that remains after deducting those costs. To stay compliant with HMRC, it is essential to know what can and cannot be claimed. What Are Allowable Expenses? In the simplest terms, allowable expenses are costs incurred "wholly and exclusively" for business purposes. They are the costs that are incurred to generate income for your business. Common Allowable Expenses Here’s a breakdown of the most common expenses that you, as a self-employed individual or small business owner, may be able to claim. Office Costs Rent and Utility Bills - if you rent an office or workspace, you can claim for rent, business rates, and utilities such as electricity, heating, and water. Home Office - many self-employed individuals work from home. You can either claim a proportion of your household bills or a simplified flat rate that HMRC allow (£6 per week at the time of writing). Office Supplies - this includes items such as stationery, postage, printer paper, and any small equipment used in the daily running of your business. Clothing Costs You can claim for uniforms or safety/protective clothing but not for normal clothes, even if you wear them to work. Travel Costs You can claim for business-related travel, but not your daily commute to a regular place of work. Allowable travel expenses include: Vehicle Costs - if you use a car/van for business purposes, you can claim for fuel, insurance, servicing, and repairs. There are two ways to claim:
 - Actual costs - claim for the costs you pay. 
- Simplified mileage rates - HMRC allows you to claim 45p per mile for the first 10,000 business miles driven in a year, then 25p for additional miles. You'll need to keep detailed records of the costs and the business miles. Public Transport - train, bus, taxi, or plane fares can be claimed if they are for business purposes. Accommodation - if you travel for work and need to stay overnight, you can claim for reasonable hotel or accommodation costs, as well as meals incurred while away from home on business. Professional and Financial Costs Accountancy and Legal Fees - fees paid to accountants, solicitors, and other professional advisers can be claimed if they are related to your business. Bank charges - you can claim bank fees, such as charges on a business account or interest on loans used for business purposes. Marketing and Advertising Marketing and advertising are critical for growing your business, and expenses in this area are allowable. These include: Advertising in newspapers, online, or on social media. Website costs, including domain registration, hosting, and development. Costs for printing business cards, brochures, and promotional materials. Costs of supplying products to influencers in return for advertising. Note that this is also likely to be considered a sale of the product to the influencer. Subscriptions and Training Subscriptions - you can claim for membership fees to trade bodies or professional organisations relevant to your industry, as well as subscriptions to professional magazines or journals. Training Courses - training that is directly related to your business or the work you do is allowable. Staff Costs If you employ staff, you can claim the following as allowable expenses: Salaries - wages and salaries paid to employees, including bonuses, overtime, and statutory payments such as sick pay and maternity pay. Employer’s Pension Contributions Employer’s National Insurance Contributions Training Costs for Employees - training that is necessary to improve the skills and performance of your employees. You will likely need to run a payroll scheme if you employ staff. Stock and Materials For businesses that sell products, the cost of stock, raw materials, and goods purchased for resale are allowable expenses. Business Insurance Business insurance premiums are allowable if they cover: Professional indemnity insurance. Public liability insurance. Employer’s liability insurance. Contents or vehicle insurance specifically for business assets. Capital Allowances While capital expenses, such as purchasing equipment or machinery, are not considered day-to-day business costs, you can claim capital allowances on these expenses. They are available on the cost of machinery, office equipment (e.g. computers and printers), and even some vehicles. The Annual Investment Allowance (AIA) allows most businesses to deduct the full cost of qualifying assets up to a limit each year. Expenses You Cannot Claim Not all expenses are allowable, and some costs cannot be deducted for tax purposes. Common examples of non-allowable expenses include: Personal Expenses - any costs incurred for personal or family use are not deductible, even if some business-related activities take place during the same period. This includes clothing (unless it's protective clothing or a uniform) and your daily commute. If you have a limited company there are other tax consequences of the company paying for personal expenses so it’s best to keep these separate. Fines and Penalties - HMRC does not allow claims for fines or penalties, such as speeding tickets, even if they were incurred while carrying out business activities. Entertaining Clients - while you may incur costs for entertaining clients or business contacts, HMRC does not allow these for tax purposes. Staying Compliant with HMRC To stay on the right side of HMRC, make sure that all expenses are legitimate business costs and keep detailed records and receipts to support your claims, as HMRC may request evidence during a tax review. We can help you with advice on the costs to claim to stay as tax efficient as possible and keeping your records.

From April 2025, holiday lettings will be treated as normal residential properties and taxed like them which means the tax benefits will be lost. Mortgage Interest Relief Mortgage interest is an allowable expense when calculating rental profits for an FHL but this will be removed from April 2025. If your holiday let has a mortgage and you’re a higher/additional rate taxpayer then you’re likely to pay more tax. Expenses Capital allowances can be claimed for FHL’s which is tax relief for fixtures and fittings but this is not available for usual residential properties. Capital Gains The sale of an FHL property would potentially qualify for Business Asset Disposal Relief which means capital gains tax (CGT) could be as low as 10%. From April 2025 the usual CGT rates for residential property will apply. At the time of writing that’s 18% at the basic rate and 24% at the higher rate. There is speculation that these rates may be increased at the Autumn Budget. Pension Contributions Pension contributions can be made up to your relevant UK earnings (or £3,600 if earnings are lower). FHL profits count as relevant UK earnings so this means you are able to save more into your pension and get tax relief but this will be lost from April 2025. If you’re looking for advice on how this affects you then contact us.

Registering For Self-Assessment If you started your business between 6 April 2023 and 5 April 2024 then you’ll need to register for self-assessment by 5 October 2024. Filing Your Tax Return If you need to file a tax return for the 2023/24 tax year then the deadline is 31 January 2025. Penalties will be charged for late filing. Tax Payments If you have tax payable for the 2023/24 tax year then the due date is 31 January 2025. If you owe over £1,000 then you may need to make payments on account for the 2024/25 tax year on 31 January and 31 July 2025. Interest and penalties will be charged for late payment. Getting Organised If you need an accountant to help with your 2023/24 tax return then don’t delay. Selling a UK Residential Property You may need to file a Capital Gains Tax (CGT) return and pay the tax by 60 days after completion. If you need an accountant to help with your CGT return then speak to them before completion or very soon after to avoid missing the deadline. Penalties will be charged for late filing. Interest and penalties will be charged for late payment.