What Expenses Can a Limited Company Director Claim?

Most limited company expenses guides give you a long list and leave you to work out the awkward bits yourself. Not ideal. Directors usually need to know what is fully deductible, what HMRC might question, and what evidence they need to keep if anyone asks later.

This guide answers those questions clearly.

What Expenses Can a Limited Company Claim? The Core Rules

The main rule is that an expense must be incurred “wholly and exclusively” for business purposes.

Every allowable expense reduces your company’s taxable profit. At the 25% Corporation Tax rate, a £1,000 deductible expense saves the company £250 in tax. If your company pays the small profits rate, the saving is £190 per £1,000.

Expenses can be paid directly from the company bank account or reimbursed to a director or employee who paid personally.

Mixed-use costs, such as a phone used for both work and personal calls, may be partly claimable. You claim the business-use proportion only. Purely personal costs cannot be claimed at all, even if they went through the company account.

If your company is VAT-registered, there may be another benefit too. You can usually reclaim input VAT on most business purchases through your VAT return, as well as getting the Corporation Tax deduction.

Limited Company Expenses List: 20 Categories You Can Claim

Staff costs

Salaries, wages and employer National Insurance Contributions for directors and employees are fully deductible.

Accountancy and professional fees

Fees for preparing annual accounts, running payroll, filing VAT returns and giving general tax advice are allowable. Legal fees connected to business operations can also be claimed. Personal legal disputes cannot.

Office costs and premises

Rent, business rates, utilities and office supplies for your business premises are deductible.

Software and IT

Cloud tools, accounting software, project management platforms and other business subscriptions are claimable. Hardware such as laptops and monitors may need to be treated as capital allowances rather than ordinary revenue expenses, depending on the value and type of asset.

Business insurance

Public liability, employers’ liability, professional indemnity and cyber insurance premiums are fully deductible.

Travel and subsistence

Business travel by train, plane or taxi is allowable. Meals and accommodation can also be claimed for overnight business trips. Normal commuting does not count.

Marketing and advertising

Website costs, online ads, printed materials, PR fees and social media advertising are all deductible.

Training and development

Training is allowable where it updates or maintains skills needed for the current role. Training that prepares someone for a completely new profession is not.

Bank charges and interest

Business bank fees, overdraft interest and loan interest on borrowing used for the business are deductible.

Telephone and broadband

If the contract is in the company’s name and used for business, the cost is generally claimable. Personal contracts need to be apportioned so only the business-use share is claimed.

Stationery and printing

Paper, printer ink, envelopes, branded materials and other stationery used for the business are fully deductible. Small costs, yes. Still worth recording properly.

Staff events

The cost of an annual staff event, which is open to all employees, such as a Christmas party, is exempt from tax and National Insurance up to £150, inclusive of VAT, per employee per year. If the cost goes over £150 per head then the full amount becomes a taxable benefit, not just the excess.

Pension contributions

Employer contributions to a registered pension scheme are deductible for Corporation Tax.

Repairs and maintenance

Repairs and maintenance for business equipment, vehicles or premises are allowable. Improvements that increase the value or function of an asset may need to be treated as capital expenditure.

Subscriptions and memberships

Professional body memberships and trade journal subscriptions related to the business are claimable.

Charitable donations

Qualifying donations to registered charities can reduce your Corporation Tax bill.

Raw materials and stock

Goods bought for resale, or materials used to deliver your products or services, are deductible.

Commission and freelancer payments

Payments to subcontractors, freelancers and agencies for business work are fully allowable.

Bad debts

If a customer owes your company money, you have made reasonable efforts to collect it, and the debt is genuinely irrecoverable, you can write it off as a bad debt and claim a Corporation Tax deduction. The debt must have been included in your turnover first and formally written off in your accounts.

Research and development

R&D expenditure may qualify for enhanced tax relief under HMRC’s R&D schemes, giving deductions above the actual amount spent.

Which Limited Company Expenses Are 100% Deductible?

Revenue expenses with a clear business purpose are deducted in full in the accounting period when they are incurred. Office rent, accountancy fees and staff salaries are straightforward examples.

Capital expenditure works differently. If your limited company buys assets such as computers, machinery or vehicles, you do not usually deduct the full cost as a normal expense. Instead, you claim through capital allowances. The Annual Investment Allowance gives 100% relief on qualifying plant and machinery up to the annual limit, so the end result can feel similar. But the record-keeping treatment matters.

Client entertainment is specifically blocked. Even if dinner with a potential customer leads to a signed contract, HMRC still disallows the cost.

Partial-use items are not 100% deductible. If a laptop is used 70% for business and 30% personally, only the 70% business-use share can be claimed.

Director salary is worth mentioning here too. It is 100% deductible from company profits, which is why an optimised director salary is often part of sensible tax planning. The thing to watch is classification. Mixing up revenue expenses and capital expenditure is one of the most common record-keeping mistakes, so get it right from the start.

Home Office Expenses for a Limited Company Director

A limited company can reimburse a director for the extra household costs that come with working from home. Where there is a regular homeworking arrangement, the company can usually pay up to £6 per week, or £26 per month, without receipts or a detailed calculation.

From 6 April 2026, HMRC scrapped the ability for directors and employees to claim working-from-home tax relief directly from HMRC (via self-assessment or a P87 form), covering both the flat £6 per week rate and actual-cost claims. That change doesn't affect your company reimbursing eligible homeworking costs, which remains available as set out below.

Your company can pay more than £6 per week if the actual additional costs are higher, but you'll need evidence to support the amount. That can include extra heating, electricity and metered water used because you are working from home. Fixed household costs such as mortgage interest, rent and council tax do not normally qualify under these reimbursement rules.

Broadband is a little more specific. It can usually only be reimbursed tax-free where you did not already have a connection and one was installed mainly for business use. An existing personal broadband package does not suddenly become an additional cost just because you also use it for work.

Another option is a formal licence agreement, where the company rents office space in your home. The company may be able to claim the rent as a business expense, while you declare the rental income personally. This can work, but it needs proper documentation and a clear view of the wider tax implications before you set it up.

Vehicle and Mileage Expenses Through a Limited Company

When a director or employee uses their own vehicle for business journeys, the company can pay Mileage Allowance Payments and claim them as a deduction. HMRC’s approved rate is 55p per mile for the first 10,000 business miles in a tax year from 1 April 2026, then 25p per mile after that.

Commuting from home to a permanent workplace is not a business journey. Travel to temporary workplaces, client sites and business meetings are usually classed as business travel.

If the company owns the vehicle, running costs such as fuel, insurance and servicing are deductible. However, any personal use creates a Benefit in Kind charge, which can trigger Income Tax and National Insurance for the director.

Electric company cars are much cheaper from a tax point of view. The Benefit in Kind rate for electric vehicles is 4% for 2026/27, rising gradually to 9% by 2029/30. Higher-emission models can face rates of up to 37%.

Company vans have their own Benefit in Kind rules if there is private use beyond ordinary commuting.

Expenses a Limited Company Cannot Claim

Client and customer entertainment is the big one. HMRC specifically blocks it. There is no partial deduction, no clever workaround, and no exception just because the event helped win new business. Meals, drinks, event tickets and hospitality for non-employees all fall into this area.

Staff entertaining where only employees attend may be deductible, subject to the £150 per head annual event exemption. But if a client joins the table, the whole event can risk being treated as disallowed entertainment.

Personal purchases cannot be pushed through the company. Everyday clothing that is not a uniform or protective equipment, personal holidays dressed up as business trips, gym memberships and personal subscriptions are all off limits.

Fines and penalties issued to the company are not deductible. That includes late filing penalties, surcharges and parking fines. Political donations are not deductible either.

Dividends are not expenses. They are paid from post-tax profits and do not reduce your Corporation Tax bill. This is one of the fundamentals that catches newer directors out.

Mixing personal and business spending is one of the quickest ways to make your accounts messy and attract unwanted HMRC attention. Keep them separate from day one.

What Receipts and Records Does HMRC Require?

Every expense claim should be backed by a receipt or invoice showing the supplier name, amount and date.

Mileage needs a proper log. That means recording the date of each journey, the destination, the business purpose and the number of miles driven. HMRC can reject mileage claims entirely if there is no log to support them.

Digital receipts are fine. You do not need to keep paper originals as long as the images are clear, complete and readable.

HMRC can open an enquiry up to four years after the filing deadline for innocent errors. That can stretch to 20 years if HMRC suspects deliberate fraud.

Director expense claims should go through the company’s expense reporting process and be paid from the company bank account wherever possible. That gives you a clean audit trail.

A good accountant can help set up a record-keeping system that keeps HMRC happy from the start, rather than trying to rebuild everything later.

Not Sure What You Can Claim?

Getting your limited company expenses right means a lower Corporation Tax bill and fewer nasty surprises if HMRC comes knocking. TurnerBerry works with limited company directors across Bristol, Cardiff, the South West and Wales to make sure allowable expenses are claimed properly and records are kept in order.

We give straightforward advice throughout the year, not just when the deadline is suddenly breathing down your neck. Book a consultation with us and get a clearer handle on what your company can claim.