When a £1,000 fee for a LinkedIn guru can and can’t be a limited company expense

We noticed a PSC contractor struggling on a forum to work out what is and isn’t an allowable expense – not in relation to a CV rewriter’s service (which we’ve demystified) -- but in relation to a LinkedIn profile rewriter’s service.

Seems similar enough, writes Matt Fryer, managing director of People2.0 company, Brookson Group. But for the struggling contractor, the full service of the LinkedIn guru, costing £1,000, included pre-written social media posts for the contractor’s limited company, and a covering letter template for “job applications.”

What does a LinkedIn guru typically provide as a service?

A LinkedIn guru’s service (at this sort of fee) is essentially a premium offering by an expert in LinkedIn who helps professionals (including contractors) enhance their profile on the business network to improve their visibility, prospects and network.

The aim of the service is to provide you with a professional, polished outlook on LinkedIn, ensuring it stands out in searches by recruitment decision-makers and to prospective clients.

Essentially, the LinkedIn guru works with you to provide a service that will be tailored specifically to your career goals, so you can outline your professional offerings effectively to any party who checks out your profile.

The service may include (but is not limited to) the following three offerings:

• Profile optimisation
• Writing engaging posts for your target audience
• Updating your profile sections to keep you current and on top of trends.

The key benefit of a LinkedIn expert’s service is that it enables you to enhance the promotion of you and your PSC, to a substantial audience, for work which you actually want.

What is the basic HMRC rule for allowable expenses in your company?

The basic HMRC rule if you’re a limited company director is that a deduction is allowed for expenses if incurred “wholly and exclusively” for the purpose of the trade.

This HMRC rule works by prohibiting expenses that are not “wholly and exclusively” incurred, stating:

“In calculating the profits of a trade, no deduction is allowed for…expenses not incurred wholly and exclusively for the purposes of the trade.”

Unlike the equivalent rule for employment expenses, there is no requirement that the expense is ‘necessarily’ incurred. This means that as long as an expense is incurred for the purposes of the business, and only for that purpose, a deduction is given. There is no requirement that it is necessary to incur the expense for it to be deductible.

Is there a ‘duality of purpose’ rule to consider with a LinkedIn rewriter’s expenditure?

Simply put, ‘duality of purpose’ is when an expense has both a business purpose and some private element too.

Applying this to the situation of our struggling contractor, we need to ask -- could the LinkedIn guru’s service benefit the contractor both in business and personally?

Well, HMRC could consider that you may be able to use the LinkedIn service for both contracting roles (outside IR35) in your company, and also for individual job roles (or where inside IR35 working through your company). Therefore, as such, the service will meet the ‘duality of purpose rule’ and be disallowable.

However, in many situations, this can be a grey area and we normally apply the “wholly and exclusive” test before ultimately deciding.

The “wholly and exclusive” rule means that any expense must be “primarily for business purposes” to benefit from tax relief in the company.

Does LinkedIn guru expenditure meet the ‘primarily for business’ requirement?

If the LinkedIn guru’s service promotes your expertise that you provide as a freelance contractor working in your company, this would of course, be beneficial for the purposes of trade and as such would help to drive up trade accordingly -- which would meet the ‘primarily for business’ purposes rule.

When drafting the narrative of your profile with the guru, and assuming you want the expense to be allowable, you should consider ensuring that your LinkedIn profile is principally PSC-focused.

Pre-written social medial posts for your PSC will assist in this respect, as in effect, your LinkedIn page will act as an advertising platform for your company. 

Similarly, covering letters for applications or submissions that look to drum up trade for your PSC with prospective clients, will assist too.

Contrast this with working via an umbrella company or being inside IR35…

For the cost of a LinkedIn profile rewriting service to be allowable as an expense of employment, it must be “wholly, exclusively and necessary” in the performance of your duties.

This means that any person performing your role would have to incur the expense, and that the expense is incurred while performing your duties -- rather than putting you in the position where you are able to perform those duties.

As paying for a LinkedIn guru service is clearly not necessary to the performance of your duties, then this would not be an allowable expense of employment.

TL;DR: Can I expense my LinkedIn profile?

Investing in your professional online presence, on LinkedIn or other professional platforms, can offer significant benefits.

However you should consider the costs versus the benefits.  

From an HMRC standpoint, a LinkedIn guru’s service costs could be considered to be a grey area. However, if the company is able to demonstrate it is for the purpose of trade and “primarily for business purposes,” by virtue of the LinkedIn profile and provided service being limited company-focused, then the expenditure incurred should be allowable.

To be safer than safe however, we would always advocate taking specialised advice from a trusted, experienced and qualified accountant should you be unsure about allowable expenses as a limited company director -- and not just in relation to the world's largest professional network.