Growing a successful aesthetic business means understanding the important financial responsibilities that come with it. While this isn’t always the most enjoyable part of running a limited company, it is extremely important. Understanding what is and isn’t a tax-deductible business expense will help you make more significant savings in the future.
Limited company aesthetic clinics can claim any expenses incurred that are ‘wholly and exclusively’ for business purposes, including:
- Salaries and wages
- Accountancy fees, legal services and insurance
- Trivial benefits
- Office rent and utility bills
- Travel costs
- Advertising and marketing materials
This blog will explore the various expenses you can claim for your aesthetic clinic, including what wouldn’t be accepted, to put you in a better financial position.
For personalised advice on business expenses for your limited company aesthetic clinic, please get in touch with AudTax. We specialise in accounting for aesthetic clinics and will provide valuable insight on tailoring your company finances to be more tax-efficient.
Can all limited company aesthetic clinics claim expenses?
Business expenses (which can also be referred to as allowable expenses) are specific purchases that go towards running and managing your business. They are significant to limited companies, allowing business owners to deduct them from their tax bills.
If you are a limited company in the aesthetic sector, then you can claim expenses for your business as long as you have proof of the transactions. According to HMRC, the business expense incurred must be ‘wholly and exclusively’ for business purposes.
There are specific rules and regulations surrounding limited company business expenses, but when filled correctly, they are highly tax-beneficial.
Sole traders can also claim expenses for their aesthetic business, although the rules vary. To learn more about different company structures for aesthetic businesses, please read our blog.
How do business expenses work for limited companies?
As a limited company aesthetic clinic, you will need to purchase various products or services to keep your business in operation. These running costs can pile up, so claiming them as an allowable expense is a great way to reduce the amount of tax you have to pay.
When paying for limited company expenses, you’ll want to do it in the most efficient way possible. Purchasing directly through your company’s bank account is the most convenient way to make payments, as it lets you keep track of all business incomings and outgoings in one place, simplifying the process of filing tax returns later.
Will claiming expenses reduce my aesthetics company’s Corporation Tax liability?
When processed correctly, claiming allowable expenses for your limited company is an effective way to boost your tax efficiency. It reduces your overall profit, which, in turn, reduces the amount of Corporation Tax you are required to pay.
At AudTax, our dedicated team has a wealth of knowledge in the aesthetic industry and understands the tax implications for beauty businesses. We work to understand your business’s specific needs, ensuring you find the best solution. Contact us today for personalised advice on your business expenses.
What counts as allowable business expenses for aesthetic clinics?
A limited company expense that is incurred ‘wholly and exclusively’ for the purpose of your aesthetic business will be classed as an allowable expense and can, therefore, be deducted from your final tax bill.
Below, we take a look at various expenses you could claim from your limited company aesthetic clinic.
Uniforms could be seen as an afterthought when working out business expenses, but as an aesthetician, you’ll understand the importance of uniforms in a clinical setting. The good news is that aesthetic clinics can claim expenses on branded uniform purchases for staff members or when offering a dry cleaning service for uniforms.
Travel expenses to see clients
There may be times when you or other staff members are required to travel for work, such as visiting clients. Travel expenses can be claimed depending on how you travel. If you use a car for travel, you can claim mileage and parking costs, whereas, for public transport, you would claim the ticket cost.
If you travel for overnight trips, you can also claim accommodation expenses.
If you run a payroll for your aesthetic clinic, then you can claim staff salaries as a limited company expense. The staff salaries are deducted from your company’s revenue before calculating tax profits.
It is important to consider the IR35 when looking to hire a contractor. This legislation ensures that contract workers pay similar Income Tax and National Insurance Contributions (NIC) as employees.
As a limited company, you can claim rent, phone contracts, broadband payments and any additional office expenses as allowable expenses if they are used solely for business purposes. Similarly, if you purchase stationery for your office or clinic, then it can also be claimed.
Aesthetics training for staff
If you provide professional training to staff members, then this can be claimed as a company expense. Any purchase towards a staff’s development or training will need to be related to the company. This can include specific development such as cosmetic training and beauty treatments or a business management course.
Legal and accounting services
As your limited company grows, staying financially and legally protected is increasingly important, which means you may benefit from hiring professional services from time to time. You can claim costs for hiring legal, professional and accounting services.
What isn’t an allowable expense for an aesthetics clinic?
Now you know what can be claimed as allowable expenses for your aesthetic clinic, it is a good idea to learn what isn’t included to ensure you stay compliant.
Goods for personal use
When purchasing goods and services for your business, you might be tempted to use the products for your own personal use. However, if you make a purchase that is not solely for business use, then, in most cases, it will not be classed as an allowable expense. This can include household bills, groceries or phone contracts.
There are certain rules surrounding purchases that are part-business and part-personal, in which you may be able to claim a portion of the expense. At AudTax, our specialist accountants can help you understand exactly what can be included in your tax return so you make the most of your allowable expenses.
If you purchase clothing that you wear to and from the clinic, then it is not classed as a tax-deductible business expense, even if the clothing was bought for work.
You cannot claim tax relief on travel expenses that are for personal use, including personal trips and vacations that are not directly related to your business.
How do capital allowances work for aesthetic clinics?
Capital allowances are a specific type of tax relief that limited company aesthetic clinics can benefit from. They are available on any equipment and machinery (also known as ‘plant and machinery’) that is required to carry out work. As an aesthetician, you may need various equipment for specific procedures, making capital allowances a valuable form of tax relief.
If you purchase any equipment or machines for treatments, then they will be classed as the clinic’s asset. Assets are not taxed, but instead, you can claim capital allowances, which will reduce your tax liability over the useful life of the asset.
Can an accountant help me with expense claims?
If you are the owner of a growing aesthetic business, then professional accounting will help enhance your current success. A specialist accountant for aesthetic clinics will help you understand how business expenses are claimed and how you can implement a solid tax-saving strategy in your business.
At AudTax, our management accounts services, we will review your business expenses monthly and quarterly to ensure you make the most efficient use of business expenses. We will advise you on expenses you have not claimed so you have ample time to claim them before the year-end.
Get advice from AudTax, specialist accountants for aesthetic businesses
As a limited company aesthetician, you’ll want to run your business in the most financially efficient way possible. That means understanding necessary tax regulations, what is classed as tax deductible and how to reduce your tax liability.
At AudTax, we have specialist knowledge and experience within the aesthetic industry and understand the various tax implications for beauty businesses. As tax specialists, we’ll ensure you stay compliant with tax laws while utilising the various tax benefits available.
Claiming allowable expenses as a limited company owner will help reduce your tax liability and make your business more financially efficient. While this isn’t the only way to streamline your company finances, it is effective and shouldn’t be overlooked.
Contact AudTax today for a free consultation.
When running your limited company aesthetic clinic, you will incur costs along the way to maintain the operation of your business. These expenses can include anything from purchasing stationery for the office to hiring a specialist accountant to manage your company finances.
The good news is that business expenses are often tax deductible and, when understood correctly, can help you optimise your taxes. Working with our specialist accountants, you can better understand your financial position and make the most of each eligible deduction.