No, business credit cards need to be used for legitimate business purposes. These may include corporate travels, mobile phone bills, business lunches, office supplies or equipment. Business expenses can be submitted to the HMRC and offer tax deductions and savings on your company tax bill.
Personal expenses refer to anything for personal use, but not relating to your business, such as eating out at restaurants, shopping and holidays.
There is commonly an overlap between business and personal expenses. Therefore, it is crucial that business expenses are not abused or it can make your tax return void and incur serious penalties.
What is considered a business expense?
- Office-related costs including furniture, uniforms, cleaners, computers, screens;
- Office rent or home office expenses;
- Vehicles and maintenance;
- Marketing costs including online and offline advertising;
- Company health or life insurance and other employee benefits;
- Travel for work purposes, conferences and clients' meetings;
- Mobile phones, landline bills and internet;
- Business lunches, teas and coffees;
- Office socials and team bonding.
What is not considered a business expense?
- Meals during leisure time;
- Clothing for social use;
- Vehicles for leisure use;
- Travel for leisure or holiday purposes;
- Phones, computers and electronics for leisure use;
- Personal errands.
Can I claim business expenses if I work from home?
Yes, if you work from home full-time or part-time, run a home business, or you are self-employed, you are able to expense any legitimate costs based on the usage and portion of the home that is dedicated to your business. This includes:
- Council tax;
- Home and contents insurance;
- Desks, tables, filing cabinets;
- Computers, mobile phones and the internet;
- Teas and coffees;
- Work-related travel.
How can I manage my business expenses?
Business credit cards are a great way of keeping your business and personal expenses separate and make submitting your tax return much easier. This reduces the need for accountants to analyse individual expenses and figure out if they are genuine and allows for a much smoother process.
A lot of credit card providers offer integration with different accounting platforms so your business expenses can be easily exported straight into your accounting tool.
If your employees make business-related purchases, it may be worth requesting supplementary company card for them. This way, you can have all business expenses in one place. With most credit card providers, you can request additional cards at no extra cost and set an individual credit limit on each card.
Am I protected for the misuse of company credit cards?
Yes, in the event that company credit cards are misused by employees and have been abused for personal expenses, most providers offer financial protection to minimise costs and damage to your business.
To avoid confusion, managers should always provide clear guidelines to other credit cardholders in terms of what is defined as a business expense and a personal expense and should monitor bank statements regularly.
How can I manage business expenses with Capital on Tap credit card?
There are several tools that help you manage your business expenses if you are a Capital on Tap credit card holder. All transactions made on your credit card can be categorised in your Online Portal, so you can stay on top of your expenses.
If your business holds supplementary cards, these can also be managed in your Online Portal. You can set an individual spending limit for each card and view all transactions made by the supplementary card holders.
The Online Portal also offers integration with key accounting software providers including Xero, Sage, QuickBooks, FreeAgent, KashFlow and FreshBooks, so you can easily export your transactions.
If you are not yet Capital on Tap customer, you can apply for our credit card here.