Limited Company Expenses List

What You Can (and Can’t) Claim

Knowing what expenses your limited company can legally claim is crucial for reducing your Corporation Tax bill and managing cash flow effectively. Yet many directors either miss out on valuable deductions or fall foul of HMRC’s rules by claiming incorrectly. Whether you're a sole director running a small consultancy or overseeing a team in a growing business, understanding allowable expenses can directly impact your bottom line.

Understanding what your limited company can and can’t claim is only part of the equation, putting it into practice correctly is where things often get tricky. From categorising expenses properly to deciding how to treat items like director loans, home office costs, or staff benefits, the line between what’s allowable and what’s risky isn’t always clear-cut. That’s why many directors turn to specialist limited company accountants who can take the guesswork out of the process. With tailored advice, full bookkeeping support, and year-round compliance monitoring, we help limited companies get the most from their allowable expenses while staying firmly within HMRC’s rules.

This guide provides a comprehensive overview of what your limited company can claim, what it can’t and how to record and report expenses properly all based on current HMRC guidance. Want to understand how those expenses affect your tax bill? Check out what is corporation tax.

What Counts as a Business Expense?

HMRC defines an allowable business expense as a cost that is “wholly and exclusively” incurred for the purpose of running the business. If an expense has any personal element, it must be clearly separated or may not be claimable at all.

Expenses reduce your taxable profit, which in turn reduces the Corporation Tax your company pays. For example, if your profit is £50,000 and you claim £5,000 of valid expenses, you’ll only pay tax on £45,000.

Common Allowable Expenses for UK Limited Companies

Here’s a breakdown of typical costs your company may be able to claim:

1. Salaries and Wages

• Directors' salaries and staff wages

• Employer’s National Insurance contributions

• Pension contributions (via an approved scheme)

2. Office Costs

• Rent and business rates

• Utilities (electricity, water, gas)

• Phone and internet

• Office equipment, stationery, and supplies

3. Business Travel

• Mileage (45p per mile for the first 10,000 miles in a personal vehicle)

• Train, bus, and air fares

• Hotels and accommodation for overnight stays

• Meals while travelling for business (within reason)

4. Vehicle Costs

• If using a company car: insurance, servicing, fuel, MOT, and depreciation

• Electric vehicle charging

• Road tax and leasing costs

• Parking fees (but not fines)

5. Professional Fees

• Accountant and bookkeeper fees

• Legal advice

• Consultancy costs

• Bank charges and interest on business loans

6. Marketing and Advertising

• Website design and hosting

• Google Ads or Facebook Ads

• Business cards and branded materials

• Subscriptions for design tools or marketing software

7. Training and Development

• Courses that directly relate to your trade

• CPD (Continuing Professional Development)

• Trade journals and professional memberships (if relevant)

8. Software and Technology

• Business software (accounting, CRM, design tools)

• Cloud storage and backup

• Anti-virus software

9. Home Office Costs

• If working from home, you can claim a proportion of:

  • Electricity and heating

  • Broadband

  • Council tax (only in some circumstances)

  • Mortgage interest or rent (based on space used)

Alternatively, use HMRC’s simplified flat rate: £6 per week (no receipts required).

10. Entertaining and Staff Welfare

• Staff events (e.g. Christmas party) up to £150 per head per year

• Employer-provided eye tests if using a screen

• Tea, coffee, and light refreshments in the office

Note: Client entertainment is generally not tax-deductible and cannot be reclaimed through Corporation Tax, although it's still allowed as a business expense in the accounts.

11. Insurance

• Public liability insurance

• Professional indemnity insurance

• Employers’ liability insurance

• Directors’ and Officers’ insurance

Non-Allowable Expenses

Some costs can’t be deducted for Corporation Tax, even if they’re paid by the company. These include:

• Personal expenses (e.g. clothes, unless they are protective or branded)

• Client entertaining (e.g. meals, drinks, event tickets)

• Fines and penalties (parking tickets, HMRC penalties)

• Gym memberships or personal health treatments (unless specifically required for the job)

• Home improvements (even if you work from home)

Blurring the line between business and personal use is a common area where directors can get caught out. If in doubt, keep it separate or get advice.

Real-World Example

Imagine a small consultancy with £75,000 in income. After paying £12,000 in director salary, £5,000 in home office and travel expenses, £3,000 in software and subscriptions, and £4,000 in accountancy and insurance fees, the company reduces its taxable profit by £24,000. Corporation Tax is only due on the remaining £51,000—resulting in a tax saving of up to £6,000 depending on the rate applied.

Record-Keeping and Reporting

HMRC expects you to maintain detailed records of every expense:

• Save receipts, invoices, and contracts

• Keep digital backups (scanned copies are fine)

• Use accounting software to track and categorise each transaction

At year-end, these expenses are included in your Company Tax Return (CT600) and your statutory accounts. Poor records can lead to rejected claims and HMRC penalties.

Tax and Legal Considerations

• Expenses must be incurred wholly and exclusively for business purposes

• You must be able to justify every claim if asked

• Payments to directors and shareholders may be subject to Income Tax or National Insurance if misclassified

• Benefits in kind (e.g. company car for personal use) must be reported on a P11D

Always cross-check claims with HMRC’s official expenses guidance, or speak to your accountant before submitting your return.

Alternatives and Grey Areas

Some businesses use a business credit card to keep costs separate and easier to track. Others choose to cover costs personally and claim reimbursement but this must still follow the same rules.

Also worth considering: using an umbrella company (if you're a contractor) or running as a sole trader, where the rules differ slightly.

Practical Tips to Maximise Your Claims

• Review expenses monthly, not just at year-end

• Don’t overclaim, HMRC penalties can be harsh

• Use accounting software like Xero, FreeAgent, or QuickBooks

• Set up separate business bank accounts

• Reconcile business mileage regularly and keep a log

• Get advice if you're unsure, especially around mixed-use assets or employee benefits

Final Thought

Knowing what your limited company can claim in expenses isn’t just about saving tax it’s about staying compliant, running efficiently, and using every legal advantage available. By getting familiar with the rules and maintaining good records, you can keep more money in your business and avoid unwelcome surprises from HMRC.

If you run a smaller company or a one-person limited company, it's especially important to make every allowable expense count. With tighter budgets and fewer in-house resources, having a clear expense strategy can significantly improve your tax efficiency and long-term sustainability. We work with hundreds of small business owners who want straightforward guidance and a relationship that’s built on trust, not jargon. If you’re looking for a reliable small company accountant who will help you stay compliant and confidently claim what you’re entitled to, our team is here to support your growth from day one.

If you’ve made a profit and aren’t sure what to do with it, read what to do with surplus cash in a limited company.

If you’d like to explore related tax content, check out our Corporation Tax Help hub.