Claiming back expenses through my ltd co

[dreadnought]

It is quite possible that I am experiencing cabin fever having been couped up for the last month so this question may seem ignorant to those of you that are seasoned pro's.

If I own and run my own limited company why is claming back expenses cited as a benefit of operating this way? Surely wherever the items are paid from it's still essentially from 'my' pocket? Claiming back travel, training course costs and equipment just affects what the company has in its account and therfore the amount that I can withdraw as a dividend surely?

Am I missing something very obvious?

[NickNick]

It's all about the tax. Expenses of running a business are a pre-tax burden.

[Olly]

yeeeesss............but all the things u spend on you get 21% cheaper assuming you don't venture into 40% band by the manner in whcih you extract money from your Ltd.

+ if you're not on flat rate VAT u save that too

[dreadnought]

Thanks guys, I think I have a better understanding of why good expense management is important now.

@ Olly - I assume you mean by drawing a nominal salary and then the rest via dividends?

[Bluebird]

It is quite possible that I am experiencing cabin fever having been couped up for the last month so this question may seem ignorant to those of you that are seasoned pro's.

If I own and run my own limited company why is claming back expenses cited as a benefit of operating this way? Surely wherever the items are paid from it's still essentially from 'my' pocket? Claiming back travel, training course costs and equipment just affects what the company has in its account and therfore the amount that I can withdraw as a dividend surely?

Am I missing something very obvious?

Yes, if you pay it from your "pocket" then you've either paid PAYE or Corp Tax on the amount of money in your pocket, therefore for every £100 cash you have, you actually stated off with £120.

Now, If you pay from the company, the money has not yet been taxed, therefore a £100 item for the company equates to £100 effort of your part. If it comes out of your "pocket" it costs £120+ of effort - therefore you've worked more hours to pay for the same thing if you pay for it yourself...