Tax allowance for business phone and internet

stphnstevey

My Ltd charges back business calls, line rental and broadband costs to my client. I would then refund it to my self as employee expenses as I pay the bills as an employee

I was wondering if I could additionally charge this as a business expense off my pre-tax profits as well and effectively claim the cost twice?

mrtg0525

I'm not quite sure how you are claiming the cost twice?

1. You've got a legit business expense in the form of business calls, line rental and broadband costs. So you put it in your accounts as an expenditure.
2. You then invoice your client for it and of course book it in your accounts as income. This balances out (1)
3. You reimburse yourself for the cost of (1), which is fine because it's a business expense you just paid out of your own pocket.

The point is that you incur the expense only once, at (1) - (3) is only when the expense leaves your company bank account.

stphnstevey

mrtg0525 wrote: »

I'm not quite sure how you are claiming the cost twice?

1. You've got a legit business expense in the form of business calls, line rental and broadband costs. So you put it in your accounts as an expenditure.
2. You then invoice your client for it and of course book it in your accounts as income. This balances out (1)
3. You reimburse yourself for the cost of (1), which is fine because it's a business expense you just paid out of your own pocket.

The point is that you incur the expense only once, at (1) - (3) is only when the expense leaves your company bank account.

It all sounds very legit when you put it like that!

It seems the expense is in the accounts twice though. Using your example, it occurs in (1) but then again in (3). ie although I have occured an expense and it has been paid for by my client, I can still claim this expense off my taxable income. Therefore offsetting expenses that are really my clients expenses (they have paid for them in full) against my own income.

I don't mind, just wondered how the taxman lets you get away with it!

I was wondering, can I claim all my expenses I charge to my client as business expenses offset against my income eg hotels, petrol, parking, stamps etc?

Also, in my income and expenditure spreadsheet, I am recording (2) and (3) ie invoice of client expenses and reimbursement to employee, but not (1) ie the business cost. Should I be? I have alot and it would mean alot more bookeeping - I account for the expenses on a expense sheet seperately, maybe recording the total per month someway would suffice?

stphnstevey

Bump bump bump

LittleVoice

Telephone call cost -
originally paid for by you (as employee) and therefore due to be paid by the company
company pays you so it becomes an expense of the business
the company then deducts it from its profits

Separately, the company charges the client
The client pays - and thus has a cost which it deducts from its gross profits

Your company receives the payment - which increases its profit.

In the end the cost has been transferred to the client.

olly300

stphnstevey wrote: »

My Ltd charges back business calls, line rental and broadband costs to my client. I would then refund it to my self as employee expenses as I pay the bills as an employee

I was wondering if I could additionally charge this as a business expense off my pre-tax profits as well and effectively claim the cost twice?

Your post is confusing because you are mixing up business expenses with your personal expenses.

If the telephone is in your personal name and you make a call to a client, then you claim it back from your Ltd as an employee expense. The business includes the amount claimed in it's accounts. If the client then gives your business the money for the calls then you include it in the business accounts.

If the client pays you personally as an individual for the cost of the call then you can't claim it back from your business as it has nothing to do with your Ltd.

Your accountant will explain all this to you.

stphnstevey

LittleVoice wrote: »

Telephone call cost -
originally paid for by you (as employee) and therefore due to be paid by the company
company pays you so it becomes an expense of the business
the company then deducts it from its profits

Separately, the company charges the client
The client pays - and thus has a cost which it deducts from its gross profits

Your company receives the payment - which increases its profit.

In the end the cost has been transferred to the client.

I think I am understanding this more now!

I initially was pleased as I thought, great, I claim it as an expense to the business even though I am getting it completely repaid. (ie I claim an expense when it hasn't really cost me anything as it was fully reimbursed)

However I forgot that by getting it reimbursed from the client that would be recorded somewhere - ie in my profits.

My taxable profit is decreased by the expense, but this is countered by my taxable profit increasing by the same amount