Allowances – Making the most of those available to your business? Three allowances you could be losing out on.

1. Travelling fixed rate allowances
If you use your personal car for qualifying business journeys, your employer can pay you a tax free allowance of up to 45 pence per business mile for the first 10,000 miles and 25 pence per business mile thereafter in each tax year. Alternatively, if you use your own personal bicycle for qualifying business journeys you can claim 20 pence per business mile.

As for all travelling expenses, please ensure that there is no reason why you can’t claim travelling expenses.

2. Use of home as office allowance
There are two methods to calculate the use of home as office allowance and before claiming, it is important to spend some time looking over to check which one best suits your business.

1. The first is the most straight forward method and is based on a fixed rate of £4 per week. It’s as simple as that! This is ideal for service company directors, because the majority of your time will be spent at your client’s premises undertaking the contract duties. Also, there is no requirement to provide evidence.
2. The other method however, is a much more detailed calculation which is based on a proportion of your home expenses and the estimated usage for your home office. This is ideal if a significant proportion of your work must be undertaken from your home office in accordance with your contract and you are not able to perform the duties at your client’s premises.

Whichever method is adopted, it is recommended that you make best use of this allowance.

3. Staff party allowance
You can claim expenses of up to £150 per employee or director for an annual staff party. It is regarded as a tax-free benefit providing that you meet the following criteria:

• It is an annual event, such as summer day out or Christmas party.
• The total cost must not exceed £150 per head.
• The £150 per head includes VAT and any other expenses such as travel and accommodation.
• The event must be available to all members of staff.
• The event must be for entertaining staff.

Many companies with just one director may believe that this is not applicable, but that is not the case. You are not expected to sit alone with your Christmas party hat on, you can bring a guest along too, and they will count towards the £150 per head.

It is important to note that you can’t claim £150 without incurring the cost so you may need to retain your receipts for the event. Additionally the cost cannot exceed £150 per head, even by 1 penny so ensure that the claim is no more than this or the full amount will be taxable on the employee.

We hope that these allowances will be of use to you, however if you would like to discuss any aspects of this, please contact Debbie Ferguson, a member of our specialist contractor team on 0131 317 7377 or email debbie.ferguson@jsca.co.uk .