Running a limited company comes with a range of tax benefits – but it’s crucial to know which business expenses you can legitimately claim. Claiming the wrong expenses can lead to HMRC penalties, while missing allowable ones means paying more tax than necessary.
In this guide, we explain what expenses are allowable for UK limited company directors and what to avoid.
What Makes an Expense “Allowable”?
HMRC defines an allowable expense as something that is “wholly, exclusively and necessarily incurred for the purposes of the trade.”
It must be:
- For business use only
- Not for personal benefit
- Reasonable in cost and frequency
Let’s break it down by category.
Common Business Expenses You Can Claim
1. Travel and Mileage
- Business-related train, bus, flight and taxi fares
- Mileage for using your personal vehicle for work (45p per mile up to 10,000 miles)
- Hotel stays and meals on overnight business trips
Not claimable: Regular commuting from home to your usual workplace.
2. Office Costs
- Office rent or coworking space
- Stationery, printer ink, postage
- Business phone line and broadband
3. Working from Home
- Flat rate (e.g. £6/week) or
- A portion of household bills (based on business use)
4. Equipment and Software
- Computers, phones, office furniture
- Cloud software like accounting tools or project management apps
5. Professional Fees
- Accountancy services
- Legal advice
- Business insurance (e.g. professional indemnity, public liability)
6. Training and Development
- Courses and seminars related to your current business activities
- Professional memberships and subscriptions (e.g. AAT, ACCA, ICAEW)
Not claimable: Courses unrelated to your current trade (e.g. career changes)
7. Marketing and Advertising
- Website hosting and domain name costs
- Paid social media, Google Ads, printed marketing
- Client gifts (if under £50, not food/alcohol, and branded)
Expenses You Can’t Claim
Personal Spending
- Non-branded clothing
- Meals that aren’t part of business travel
- Household bills not used for business purposes
Fines and Penalties
- Parking fines
- HMRC penalties
Family Members
- You can’t pay family members unless they do real work at a market rate.
How to Record and Reimburse Business Expenses
Keep all receipts, mileage logs, and invoices. Record them in accounting software or a spreadsheet, and reimburse yourself properly through the company. This keeps your records compliant and ready for audit.
Need Help with Business Expense Claims?
At Crossley & Davis, we help company directors like you maximise allowable business expenses and avoid HMRC pitfalls. Whether you’re just starting out or looking to tidy up your processes, we’ve got your back.
Get in touch for a free review of your expenses and bookkeeping setup.
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