first expenses

[reddeagle]

I am two months working now with my company and i have yet to withdraw money from the accounts. Shameful i know, but i had to work a month in advance etc.
Firstly I think I need to change accountants, i am getting very little help from him and so far the only thing he has done in this two months is send me my first pay slip.
I need to claim back on some expenses, i dropped him a mail last week asking what was acceptable to expense, but his reply was no help.
I commute to work each day and i leave home at 7.30 and get back again for 8pm at night, long day but sometimes.

So far I am expensing.
• Laptop
• Train and tube ticket.
• One or two taxi receipts.
• Broadband/ BT Line

If i didn’t have the laptop in with this expense statement, I would only be getting about 400 a month in expenses. Does this sound low or normal?
I was told by a fellow contractor today that I should take dividend maybe every quarter, but he mentioned not taking too much etc, is there a guide for what dividend i should pay myself ( daily rate is 600)

Any help would be great while I find my feet

[TheFaQQer]

Hi,

There is no "normal" amount of expenses - I work away a lot, so my expenses are quite high. If I was working at home, they would be low.

As for the dividend, you can only pay a dividend out of profit - there is no guideline about how much or how little you should pay yourself. Assuming you don't need more, then you don't want to be taking a dividend that puts you in the higher tax bracket for the year.

[Bear]

I assume by laptop - you mean the purchase of a laptop.

If so, and you have paid for it personally then yes a one off expense to return the cost to you. The laptop is then a business asset and depreciates accordingly in the accounts.

Sounds like your close to London, my train and tube comes to about £375 a month - so added to your other bits sounds about right.

You should be getting a salary each month as well - amount of this is a controversial subject so your accountant should advise but could be as low as £500 a month up to maybe £1000 a month (you could pay more but tax rises as you do).

Dividends are then paid out of profits made by YourCo (This is all assuming your running a Ltd). You can pay them when you like but must be from profits. Quarterly is reasonable.

[xoggoth]

Expenses are what you spend, there is no typical. Most contractors probably spend most on travel and subsistence, so if lucky enough to work at home or near home yours may be quite small. Suggest you download booklets 480 and 490 from IR website, they cover most of the rules you need. Also have a search on accountingweb and shout99 for info on more obscure things you can claim.

Incidentally, although have not used this route myelf, if the laptop is yours and not company's you can still claim capital allowances for business use via your tax return.

[[email protected]]

no limit on expenses as long as they are for business purposes.
Your accountant should be able to give you a monthly profit figure (sales less expenses and your salary) after allowing for tax deductions.

Leave the accruing tax liability in the company bank account so you don't have to worry about the year end tax bill.

You now have a figure which l call 'safe available funds', i.e funds which you can do what you like with.

Your accountant should be able to provide you with the most tax efficient way of drawing the funds, i.e. expenses, low salary, dividend.