What Expenses Can a Limited Company Claim?

One of the key benefits of running a limited company in the UK is the ability to claim business expenses to reduce your taxable profits However, to stay compliant with HMRC and Companies House, it’s important to understand what qualifies as an allowable expense

This guide will walk you through the most common limited company expenses you can claim, what’s disallowed, and how to keep proper records to avoid penalties

What Counts as a Business Expense?

HMRC defines an allowable business expense as something that is “wholly and exclusively” for the purpose of running your business These expenses reduce your company’s profit and therefore your Corporation Tax bill

Keep in mind:

● Personal use must be excluded.

● You must keep proof (receipts, invoices, etc )

● Claims must be reasonable and justifiable

Expenses a Limited Company Can Claim

Office Costs

● Rent for business premises

● Utilities (electricity, internet, phone)

● Office furniture

● Stationery and supplies 2. Staff Costs

● Salaries and wages

● Employer’s National Insurance

● Staff training

● Pension contributions

3. Travel and Subsistence

● Business mileage (45p per mile up to 10,000 miles)

● Train and bus fares

● Hotels for business travel

● Meals during work-related trips �� Note: Daily commuting from home to your regular workplace is not an allowable expense

4. Professional Services

● Accountants

● Solicitors

● Consultants

● Subcontractors

Need help managing your expenses and taxes? The team at Limited Company Accountants is here to make sure your finances stay compliant and tax-efficient

5 Marketing and Advertising

● Website costs

● Social media ads

● Flyers and brochures

Sponsorships and business events

6. Software and Subscriptions

● Accounting software (e.g., Xero, QuickBooks)

● Industry-specific tools

● Microsoft Office, Zoom, Adobe Creative Suite

7. Phone and Internet

● Business mobile phone contracts

● Broadband costs (business portion if used from home)

8. Training and Education

● Courses that improve your skills related to the business

● Industry certifications 9 Insurance

● Public liability insurance

● Professional indemnity insurance

● Employers’ liability insurance

10. Capital Allowances

Large items (like computers or machinery) can’t be expensed directly, but may qualify for capital allowances allowing you to deduct a portion of the cost over time through depreciation. What Expenses Cannot Be Claimed?

Some expenses, even if related to your business, are not tax-deductible:

● Client entertainment (e g , restaurant meals or gifts)

● Fines and penalties

● Personal expenses

● Clothing (unless it’s branded or safety gear)

● Commuting costs

How to Keep Records of Expenses

To stay compliant and audit-ready:

● Keep digital or paper receipts

● Use accounting software to record every transaction

● Separate personal and business accounts

● Keep records for at least 6 years

External Resources

● HMRC: Expenses for Businesses

● Companies House: Running a Limited Company

● Wikipedia: Depreciation Explained

Get Professional Help with Your Company Expenses

Managing allowable expenses properly can significantly reduce your Corporation Tax bill But missing out on legitimate claims or accidentally including disallowed ones can cost you money or even lead to HMRC penalties.

At Limited Company Accountants, we help limited companies:

● Identify every claimable expense

● Set up accurate bookkeeping systems

● Ensure full compliance with HMRC

● Prepare year-end accounts and tax returns

Don’t leave money on the table Contact Limited Company Accountants today for expert advice and personalised accounting support