Credit Cards - Claim as expenses?

[skytecuk]

Hi all,

I have previously used a credit card to buy goods for my business; now I am also incurring interest on this.

Can I attach the supplier invoice to an expenses claim and submit this easily?

Can I also claim the interest as an expense?

Best regards

 

[Scalloway]

Yes you can do an expenses claim for the business expenditure. Any interest claimed must be clearly calculated.

 

[David Griffiths]

If it's a limited company you can claim for the business expense but not for the interest.

 

[skytecuk]

I heard that too...so I can't claim the interest?

 

[skytecuk]

We both used (my wife and I) our credit cards to finance stock purchases and bill payments when the business was a sole proprietorship.

Now the business is a limited company- we don't want to be making large (taxable) payments to ourselves to cover the interest and paying off the debt- but can we legally claim these as expenses although some of the purchases were made 1+ years ago?

Otherwise it seems these bills are 'locked in' to the old business and we'll be penalised if the new business pays us to cover these bills.

Sincerely appreciate any help!

 

[Scalloway]

Otherwise it seems these bills are 'locked in' to the old business and we'll be penalised if the new business pays us to cover these bills.

If they were for running costs of the sole trader business the interest is nothhing to do with the limited company.

 

[skytecuk]

They were for stock mainly. Without the interest, could we still claim the balance on the cards? Thanks.

 

[David Griffiths]

You don't claim the "balance on the cards" - you claim the expenditure at the date that it was made. So if you purchased stock for the sole trade that cost should go into the sole trade accounts for the relevant period.

You can't claim that cost against the company.

 

[SBlundell]

David Griffiths has answered your question fully I think - you can reimburse business expenditure purchased on a private credit card with no tax implications but not the interest suffered therein. If it helps, the relevant bit of the HMRC manual:

SAIM10020 - Relief for interest paid: general conditions

General conditions

Overdrawn accounts, credit cards and reasonable commercial rate of interest

Relief is not given for interest paid on an overdrawn account or on a credit card or similar arrangement, nor is relief given for more than a ‘reasonable commercial rate’ of interest (ITA07/S384).

If the interest was on a company credit card in the company's name it would be a bit different.

 

[skytecuk]

Thanks for the replies so far, I appreciate it.

In terms of spending on these cards when the business was a sole-trader- because these haven't been paid off yet- are these locked in to the old company?
I.e. the new company has no responsibility for them?

 

[David Griffiths]

Isn't that exactly what I said above?

 

[Scalloway]

Any expenditure on the cards for the sole trader business belong to the sole trader business. The expenditure should have been set against the profits of the sole trader business . The company has no responsibility for them.