As a UK limited company contractor small business owner, can you claim for professional subscriptions as genuine business expenses? In addition, while UK contracting and running your own business, when are professional subscriptions tax-deductible? These fees are often commonplace if you work in a professional industry and are relevant to your job. Moreover, most professional bodies or learned societies will charge annual professional fees or subscriptions for being a member. HM Revenue & Customs (HMRC) also have an approved professional subscriptions list of bodies. Therefore, when can you claim allowable HMRC professional subscriptions?
A UK contractor who runs their own company may work in many different industries. As a result, they may be a member of one or more professional organisations as part of their contracting work. Therefore, when can you claim for professional subscriptions that you pay to approved professional bodies or learned societies of whom you are a member? In addition, when are such professional subscriptions tax-deductible?
Allowable HMRC professional subscriptions
As mentioned earlier, in most cases, the body or society will typically charge an annual membership fee. In return, the member will receive certain benefits. Therefore, can you claim tax relief for professional subscriptions? If you can claim your professional membership fees as business expenses you can save Corporation Tax on these costs.
HMRC official list
The list of `approved’ HMRC professional subscriptions lists certain bodies, and we will go over this later. Therefore, let us now investigate this in more detail and consider when professional fees are tax-deductible.
HMRC guidelines when you claim tax relief (professional fees)
Where you can claim
HMRC’s guidelines on paying for business subscriptions and where you can receive tax relief on professional subscriptions are currently:
`you can claim tax relief (by this, they mean Corporation Tax in the context of running a limited company) on fees or subscriptions you pay to approved professional bodies. But only if you must have this membership or it relates to your job.
Where you cannot claim
Please note that you are not eligible to claim for professional subscriptions and reclaim the tax on these payments to professional organisations where they are:
- Life membership subscriptions.
- Fees or subscriptions you have not paid for yourself.
If you put either of the above type of professional fees through your company as a cost, they will need reporting on form P11D. As a result, the fees are subject to income tax for you and National Insurance for your company.
Other factors around allowable HMRC professional subscriptions
When you are in business for yourself, you cannot claim any costs for your private or joint use. In tech-speak, we call this `duality of purpose.’ If you claim for these such items will be taxable as a Benefit In Kind (BIK):
- Your company will pay Class 1A NIC on the BIK. This is 14.53% in 2022/23 and 13.8% in 2023/24.
- You will also pay extra tax on the BIK at your highest tax rate through your tax code. In turn, this will apply to your salary.
Across many industries, lots of people are in business. They will work in trade sectors with particular bodies representing them.
As an owner of your own contractor limited company, your business may be able to pay for these membership fees or subscriptions. If these benefit your business, you may also receive a professional membership tax deduction.
If you are employed or self-employed and your business subscriptions fall within those allowed, you can claim for these via your Self-Assessment tax return.
To sum up, as with any other business expense, any professional subscriptions paid by employer (your company) has to be `wholly and exclusively’ for your business. The cost should also not have a `duality of purpose.’
Additional HMRC guidelines
Guidance around a professional subscriptions tax deduction
HMRC will allow you to claim membership fees paid to approved professional organisations. There is a HMRC professional subscriptions list and this shows which organisations they approve. Therefore, if your body(s) or organisation(s) appear on this HMRC-approved subscriptions list, you can claim such professional fees as expenses through your business and they will be tax-free.
HMRC official reference point
In relation to the HMRC subscriptions list, the official reference point is Section 344 ITEPA 2003A:
`A deduction from earnings from employment is allowed for an amount paid in respect of an annual subscription provided’:
- It is payable to a body that HMRC approves; and
- The activities of the body are of direct benefit to, or concern the profession practiced in, the performance of the duties of the employment. Therefore, the society is relevant to your line of work.
List of approved bodies
As mentioned, there are HMRC approved professional bodies who are shown online and their subscription fees are allowable for tax. The HMRC professional subscriptions list of `approved’ bodies is extensive but it does not cover all professional bodies. Therefore, you should check the HMRC-approved professional bodies to see if your organisation is on here.
Therefore, there may be a body or body you are now a member of that is not on this list. If they are not on the list, the official rule is that you cannot claim these membership fees as business expenses. If you put the claims through your business, they will be reportable on form P11D, and the amount paid will appear in your PAYE code as a deduction against your tax allowances.
Claim for HMRC approved subscriptions as an expense
If you can claim tax relief on your subscriptions, you can record these as an expense in your limited company records.
Alternatively, if you are self-employed, you may ask where do I enter professional subscriptions on tax return? Basically, you can claim tax relief by recording these in box 19 on your Self-Assessment tax return.
This article gives you a better insight into how to claim for professional subscriptions (HMRC) to UK bodies and societies. As you can see, the rules here are not very simple regarding what you can claim. The HMRC professional membership list shows which bodies they approve of, but what if your body is not on here?
When you are paying for business subscriptions, it would seem that if you are:
- A member of a body in your industry; and
- It provides your business with benefits.
Your company, the employer, has paid for a professional subscription for the employee (you). Therefore, the company should be able to claim this as a business expense, which will help reduce your company’s tax bill.
Two such subscriptions that are not on the list that spring to mind are the IPSE membership cost and LinkedIn subscriptions. There will also be others too. These both provide benefits for limited company contractors, and as a result, many do claim for these. Therefore, HMRC is unlikely to disallow such claims.
We have a guide that covers tax tips for UK contractors. In this, we detail many things to consider when making yourself more tax efficient as a contractor.
Link to Contractor Advice UK group on