You can legitimately offset any pre-trading expenses against your turnover for Corporation Tax purposes once the business has started trading, as long as such expenses were incurred within SEVEN YEARS of the first day of business. This capital expenditure will be treated as having been incurred on your first day of trading and fortunately, relief can be claimed. It is therefore important to be able to demonstrate that they are both ‘reasonable’ and ‘necessary.’Īs a contractor setting up your limited company, you may also incur costs on capital expenditure, such as it you need to purchase equipment or assets before you trade. In most cases, these pre-trade expenses are reclaimable once your company is incorporated and up and running, subject to HMRC expenses rules - outlined below.īut be aware that where a limited company is being established, and the pre-trading expenses are incurred before the company exists, they are deemed personal transactions of the director. For example, your laptop and IT equipment. Such pre-trade expenses can also include items that you owned privately that you will now use in your business. These expenses are likely to be ‘pre-trade’ expenses.
#LIMITED COMPANY CONTRACTOR EXPENSES PROFESSIONAL#
To get to the point of being able to start trading you are likely to have spent money on things necessary for your business such as professional advice, travel to client meetings, paying rent for premises, getting insurance and even advertising. Common pre-trading costs contractors incur To begin to answer the key question of whether you can claim expenses before a company starts, we should remember that as a rule, a small business owner, including a contractor looking to open a limited company, cannot commence trading until they are able to supply their goods or services to a client, writes Helen Christopher, operations director at Orange Genie.
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