What Expenses Can I Claim as a Limited Company Owner?

Limited company directors must balance a broad range of financial tasks and obligations. One of the many perks of working as a limited company director is taking advantage of all the eligible allowable expenses which can help you lower your taxable profit and, by extension, your Corporation Tax bill.

Understanding what you can legally claim as a legitimate business expense is vital for fulfilling your tax obligations, maintaining HMRC compliance, and avoiding hefty fines and penalties down the line.

At Hamlyns, we help numerous limited companies and business owners navigate the often complex and confusing rules around claiming and submitting eligible expenses through their companies. This short guide will walk you through what you can and cannot claim, allowing you to continue while staying fully compliant with HMRC regulations.

The Main Rule for Limited Company Expenses

Before breaking down categories of eligible business expenses, it’s important to recognise and understand the top-level rule when submitting expense claims through HMRC.

All expenses must be ‘wholly and exclusively’ for business purposes. This means:

• The expense must be necessary for your business operations
• It must not have a dual purpose (i.e., both business and personal use)
• It must be reasonable and proportionate to your business needs

This should help confirm the validity of the main categories of allowable expenses, which we’ll break down now.

Office and Administration Expenses

Supplies and Equipment

Everyday office supplies like stationery, printing costs, postage, and computer consumables can be claimed for.

At the risk of causing confusion, equipment like computers, furniture and printers themselves are typically claimed as capital allowances as opposed to direct expenses.

Software and Subscriptions

Business software licences, from accounting packages to cloud hosting subscriptions are all allowable business expenses.

Additionally, industry-specific subscriptions to databases, open-source libraries, and special services are also claimable, if they directly relate to your day-to-day business activities.

Travel Expenses

Business Travel

You can claim for business travel costs including:

• Mileage (45p per mile for the first 10,000 miles, then 25p per mile thereafter for cars and vans)
• Train, bus, air, and taxi fares
• Car hire for business journeys
• Parking fees and toll charges

Remember that regular commuting between your home and a permanent workplace is not considered a business expense.

Accommodation and Meals

If your work activities require you to stay away overnight, your company can claim for:

• Reasonable costs for hotel accommodation
• Meals during business travel
• Subsistence costs incurred while away from your normal place of work

Professional Services Expenses

Accounting and Legal Fees

Fees paid to accountants, bookkeepers, and legal professionals for business purposes are allowable expenses. This includes costs for annual accounts preparation, tax returns, legal advice for business matters, and company secretarial services, to name a few.

Bank Charges and Insurance

Business bank account fees, charges, and business loan interest can be claimed. Additionally, business-related insurance premiums including professional indemnity, public liability, employers’ liability, and contents insurance are all allowable expenses.

Marketing and Entertainment Expenses

Marketing and Advertising

Your company can claim for:

• Online advertising
• Print advertising
• Marketing materials
• PR services
• Social media management

Business Entertainment

While you can record business entertainment as a company expense, it’s typically not tax-deductible for Corporation Tax purposes. This includes taking clients or suppliers out for meals, events, or hospitality.

Staff Expenses

Salaries and Benefits

Salaries, bonuses, and employer’s National Insurance contributions are all allowable expenses. This includes your own salary as a director. Staff benefits such as health insurance, company mobile phones, and workplace pensions are also allowable.

Training and Development

Professional training that maintains or enhances existing skills relevant to your business is typically allowable. However, training for new skills or qualifications may be treated differently, so it’s worth seeking advice.

These are just some of the allowable expenses you can claim as a company director.

How to Keep Track of Allowable Expenses

HMRC requires you to keep records of all business expenses for at least six years. This includes:

• Receipts and invoices
• Bank statements
• Credit card statements
• Till receipts
• Contracts and agreements

To ensure you’re maintaining accurate records at all times, we recommend:

• Using dedicated business accounts and cards
• Implementing expense tracking software
• Maintaining detailed records of business versus personal usage where applicable
• Retaining digital copies of all receipts and documentation

Common Errors and Mistakes With Limited Company Expenses

Personal Use Items

Be careful with items that have both business and personal use. If there’s significant personal use, you cannot claim the full amount as a business expense. Either:

• Keep the item as personal and claim the business proportion, or
• Purchase through the company and report a benefit in kind for personal use

Excessive or Unreasonable Claims

HMRC may challenge expenses they consider excessive or unreasonable. The key test is whether another business in your position would reasonably incur the same expense.

Missing Documentation

Without proper evidence, HMRC can disallow expenses. Ensure you have a robust system for capturing and storing all relevant documentation.

Recent 2024/25 Tax Legislation Changes

It’s important to stay informed about changes in tax legislation. Recent developments include (but are not limited to):

• Changes to the treatment of electric vehicles and charging points
• Updates to National Insurance Contributions (NICs)
• Adjustments to capital allowances rates and thresholds

Professional Limited Company Tax Advice and Record-Keeping

The rules around limited company expenses can be complex, and mistakes can be costly. At Hamlyns, we can help you:

• Structure your expenses efficiently
• Implement robust record-keeping systems
• Stay compliant with current legislation
• Plan for tax-efficient business expenditure

By understanding what you can legitimately claim as business expenses, you can ensure your limited company operates as tax-efficient as possible while avoiding unnecessary scrutiny from HMRC. Get in touch with us to see how our professional accountants can help your business today.