Internet access is a commonly claimed business expense for many limited companies. However, if your firm claims for broadband access costs, it needs to ensure it’s a tax-deductible cost that is allowable. For the expense to be deemed “allowable” you must demonstrate that the product or service claimed for is used exclusively for business purposes. Whether or not you can claim depends on the broadband contract you set up, and whether any mix of business and personal use takes place.
Broadband contracts in your enterprise’s name
It’s straightforward to offset broadband access costs against Corporation Tax providing you establish a business broadband contract under your firm’s name. This rule applies if the account is established at your home or office address.
However, if you operate your business broadband contract from a home address, HMRC acknowledges that some personal use is likely.
Using residential broadband for your business
You cannot offset the cost internet access as a business expense when you set up a residential broadband contract unless you can show clearly where usage is only for business.
The HMRC’s “duality of purpose” rules make it hard to prove that an additional cost to the expense you already pay, so if your company makes a claim, a “Benefit in Kind” (BIK) charge applies.
The simplest solution when you wish to offset the cost of your business broadband is always to set up your contract using the name of your limited company.
At 127 Solutions we can advise and get you connected to reliable broadband for your business that ensures you and your team enjoy seamless simultaneous access to the internet. If you have questions concerning your current connection or your firm is getting online for the first time, reach out to us now for a rapid response.
