What Expenses Can I Claim Through My Limited Company?

One of the biggest advantages of running a limited company is being able to deduct legitimate business expenses before calculating your corporation tax. The more allowable expenses you claim, the lower your tax bill.

But there are rules. HMRC requires that expenses are incurred "wholly and exclusively" for business purposes. Here's a comprehensive guide to what you can — and can't — claim.

The Golden Rule: "Wholly and Exclusively"

For an expense to be deductible against corporation tax, it must be incurred "wholly and exclusively for the purposes of the trade." This means:

• The expense must be for a genuine business purpose
• It cannot be primarily for personal use
• If an expense has both personal and business elements, only the business portion can be claimed

Allowable Expenses by Category

Office and Premises Costs

• Rent for business premises
• Business rates
• Utility bills (gas, electricity, water) for business premises
• Office insurance
• Office cleaning and maintenance
• Security costs

Working from home? If you use part of your home for business, you can claim a proportion of household costs. HMRC allows a flat rate of £6/week (£312/year) without needing receipts, or you can calculate the actual proportion of home costs used for business.

Staff Costs

• Employee salaries and wages (including your own director's salary)
• Employer's National Insurance contributions
• Employer pension contributions
• Staff training directly related to their role
• Recruitment costs
• Statutory sick pay and maternity pay

Travel and Subsistence

• Business travel (train, bus, taxi, flights)
• Mileage for business use of personal vehicle (45p/mile for first 10,000 miles, 25p after)
• Hotel accommodation for business trips
• Meals during overnight business trips
• Parking fees for business travel

Note: Travel between home and your regular workplace (your "permanent workplace") is NOT allowable. Travel to temporary workplaces or client sites generally IS allowable.

Professional Services

• Accountancy fees
• Legal fees for business matters
• Tax filing software subscriptions
• Business consulting fees
• Debt collection costs

Marketing and Sales

• Website hosting and domain registration
• Advertising (online, print, social media)
• Business cards and stationery
• PR and marketing agency fees
• Trade show and exhibition costs

Technology and Equipment

• Computers, laptops, and tablets for business use
• Software subscriptions (accounting, project management, etc.)
• Mobile phone contracts (business proportion)
• Internet costs (business proportion if working from home)
• Printers, scanners, and office equipment

Capital vs Revenue: Large equipment purchases (over a few hundred pounds) may need to be treated as capital expenditure and claimed through capital allowances rather than as a direct expense. The Annual Investment Allowance (AIA) allows 100% deduction of up to £1 million of qualifying capital expenditure in the year of purchase.

Financial Costs

• Bank charges and fees on business accounts
• Interest on business loans
• Credit card fees (business transactions)
• Foreign currency exchange costs for business transactions
• Merchant/payment processing fees

Insurance

• Professional indemnity insurance
• Public liability insurance
• Employer's liability insurance (required by law if you have employees)
• Business contents insurance
• Cyber insurance

Subscriptions and Memberships

• Trade association memberships
• Professional body subscriptions relevant to your trade
• Trade publications and journals
• Industry-specific databases

Expenses You CANNOT Claim

Client Entertaining

Business entertaining (meals with clients, hospitality events, gifts to clients) is not deductible for corporation tax purposes. You can still pay for these through the company, but they won't reduce your tax bill.

Personal Expenses

• Personal clothing (unless specialist protective equipment or uniforms)
• Personal travel (commuting to your regular workplace)
• Personal portion of shared expenses (e.g., personal mobile phone calls)
• Non-business-related meals

Fines and Penalties

• Parking fines
• Speeding tickets
• HMRC late filing penalties
• Any fines for breaking the law

Capital Repayments

• Repayment of the principal on business loans (interest IS deductible, repayment is not)

Dividends

• Dividends paid to shareholders are not a business expense — they're a distribution of post-tax profits

Director-Specific Expenses

As a director, you have some additional expense options:

Director's Salary

Your salary is a deductible expense for the company. Most micro-entity directors set their salary at the NIC threshold (around £12,570) to optimise tax efficiency.

Employer Pension Contributions

The company can make pension contributions on your behalf. These are:

• Deductible as a business expense (reducing corporation tax)
• Not subject to National Insurance
• Not treated as a benefit in kind (up to the annual allowance)

This makes employer pension contributions one of the most tax-efficient ways to extract value from your company.

Training and Development

Courses and training that maintain or update your existing skills are allowable. Training for entirely new skills or qualifications may not be.

How to Claim Expenses

1. Keep records — retain receipts and invoices for at least 6 years
2. Record them in your accounts — expenses should be recorded in your profit and loss account
3. They're deducted automatically — when you prepare your accounts, allowable expenses reduce your taxable profit, which reduces your corporation tax

You don't need to submit receipts to HMRC with your CT600, but you must keep them in case of an enquiry.

Common Mistakes

1. Not claiming everything you're entitled to — many directors miss legitimate expenses
2. Claiming personal expenses — HMRC can impose penalties for incorrect claims
3. Not keeping receipts — if HMRC enquires, you need evidence
4. Confusing revenue and capital expenses — large equipment purchases need different treatment
5. Claiming client entertaining — a common error that HMRC specifically looks for

Summary

Claiming all legitimate business expenses is one of the simplest ways to reduce your corporation tax bill. Focus on the "wholly and exclusively" test, keep detailed records, and don't forget commonly missed expenses like working-from-home costs, mileage, and employer pension contributions.