Limited Company Expenses - The Complete UK Guide for 2025/26

Running a limited company comes with the real potential to optimise your finances if you know how to handle expenses smartly. Every legitimate business expense you claim reduces your taxable profits, so, less Corporation Tax and more money kept in the business. Makes sense, right?

It’s not just about lowering your tax bill, either. Getting your limited company expenses sorted also frees up valuable cash flow, which you can reinvest straight back into the company, whether that’s scaling up, hiring, or just keeping things ticking over smoothly.

This guide is designed for limited company directors, contractors, freelancers, and small business owners across the UK. Whether you’re working from home, travel constantly for business, or running a tight-knit team, understanding what’s allowable is essential. Knowing what you can and can’t claim keeps you compliant and maximises your savings.

The bottom line? Master your business expenses, and you set your business up for better growth and financial health.

Running a limited company comes with a stack of costs. Office rent, travel for client meetings, utility bills, you name it. If the cost is necessary for day-to-day running of your company, it might count as an expense you can claim against your business income.

Every legitimate business expense you claim reduces your taxable profit, which means you pay less Corporation Tax. It's straightforward: if your company makes £100,000 profit and you claim £20,000 in allowable expenses, you only pay tax on £80,000.

Not every expense is treated the same by HMRC, though.

Two Types of Expenses

Allowable expenses are the ones that actually lower your Corporation Tax, such as your office rent, business insurance, staff wages, professional fees, and genuine business travel. Basically, anything that’s strictly for the business goes in this column.

Then you’ve got disallowable expenses. Yes, you can pay for these through your company, but they don’t touch your tax bill. Stuff like client entertainment, anything personal you buy, or parking fines. If it’s not wholly for business, you’re not getting any tax relief for it.

HMRC has a simple principle termed the "wholly and exclusively for business" rule. This is that an expense needs to be wholly for business purposes and not for individual advantage, to be claimable. If, let's say, you purchase a laptop solely for work, then it's an allowable expense. Yet if you use that laptop for both work and personal purposes, you can only claim the business-related portion.

Claiming Limited Company Business Expenses: Key Rules

Here’s how to handle limited company expenses like a pro, no corporate jargon, just straight rules.

1. Wholly and Exclusively for Business

Whatever you claim has to be strictly for business. Bought printer paper for the team? Go ahead and claim it. Brought some mood candles for your desk? Nice touch, but that’s a no from HMRC.

2. Avoiding Dual-Purpose Expenses

‍You can’t claim expenses that have a dual purpose for business and personal use. If you’re on a business trip and decide to stay a few extra days for sightseeing, only the work-related days count as deductible. The rest? That’s on your own pocket.

3. Proper Payment Method

Pay from your business bank account whenever you can. If you end up paying the bill yourself, like a business lunch with a client, just process the reimbursement later through the company. Keep it official.

4. Offsetting Against Corporation Tax

Most limited company expenses will lower your Corporation Tax, which is always good news. Office rent, tech, supplies - they’re all fair game. But entertaining clients? That one’s not tax deductible, no matter how much fun everyone had.

5. Record Keeping

‍Keeping accurate records is everything. Store every receipt, bank statements, invoice, travel ticket, whatever backs up the expense. If HMRC ever asks, you’ll need proof, so don’t skip this step.

6. Necessary and Reasonable

‍Expenses should be necessary for business operations and reasonable in amount. Need a laptop for work? Of course. Trying to expense a luxury watch? Not happening.

7. Proper Classification

‍File every expense under the right category. Lunches go under meals and entertainment, rent under office costs, and so on.

8. Timing

Make sure you record each expense in the period you incurred it, not when you actually paid. For example, if you incur a business expense in March but pay it in April, it should be claimed in the March accounting period.

Need Expert Advice on Your Business Expenses?

1. Speak to a qualified limited company accountant to ensure your expense claims are tax-efficient and HMRC-compliant
2. Book a free consultation to review your limited company’s expense policy
3. Get support on claiming pre-trading expenses, VAT deductions, and more

As a limited company director, you want to run your business in the most tax-efficient way possible.

One way to achieve this is to correctly claim allowable business expenses so that you don't have to pay more tax than you are legally obliged to.

Below is the limited company expenses list for 2025, along with examples to help you understand what qualifies.

1. Employee Expenses

2. Business Travel and Mileage Expenses

3. Office and Premises Costs

4. Phone and Internet Costs

5. Professional Services and Fees

6. Insurance

7. Marketing and Advertising

8. Training and Professional Development

9. Bank Charges and Finance Costs

10. Miscellaneous Allowable Expenses

1. Employee Expenses

Allowable Employee Expenses List:

Staff costs or employee expenses are usually one of the biggest expenses for any business. Salaries, National Insurance, workplace pensions? All deductible. Plus, you can claim for things like staff training sessions, workshops, and even the money you drop on recruitment, think job ads, agency fees, the whole lot. Some examples of allowable staffing expenses include:

1.1 Salary and National Insurance

Salaries paid to directors and employees are tax deductible business expenses.

1. Your company can also claim employer’s National Insurance Contributions (NICs) as a deductible expense
2. If your salary exceeds the annual NIC threshold, you’ll need to pay Class 1 employee NICs, and the company pays Class 1 employer NICs
3. These must be processed through the PAYE payroll system

1.2 Staff Entertainment (e.g. Christmas Party)

You can claim the cost of an annual staff event (such as a Christmas party), provided the following HMRC conditions are met:

1. The cost does not exceed £150 per head (including VAT) across all annual events
2. The event is primarily for employee entertainment
3. The event is open to all employees or all employees at a particular location
4. Employees can bring a guest, meaning the total budget may reach £300 for two people
5. If the cost per head exceeds £150, the entire amount becomes taxable, not just the excess

This is an exemption for a tax-year, so more than one event can be claimed if they collectively remain below the £150 threshold.

Resource: HMRC: Annual parties and function

1.3 Lunch and Subsistence Expenses

You can reimburse employees for reasonable subsistence costs when they are travelling or working away from their usual place of work

Examples of allowable expenses:

1. Lunch during client visits or business travel
2. Meals on overnight business trips
3. Light refreshments purchased during meetings or site work

These must be incidental and business-related — routine lunches at the workplace are not allowable

1.4 Gifts and Trivial Benefits

‍You're not required to pay tax and National Insurance contributions, nor notify HMRC about gifts or trivial benefits for an employee if it meets the following conditions:

1. The cost of the benefit is £50 or less
2. It is not cash or a cash voucher
3. It is not performance-related or a reward for work
4. It is not contractual or part of a salary sacrifice
5. The total value of trivial benefits provided to a director or office holder does not exceed £300 in a tax year

If these conditions are not met, the benefit becomes taxable and must be reported on a P11D or processed through payroll.

Resource: HMRC: Trivial benefits exemption‍

1.5 Healthcare Expenses

If you provide private medical insurance for an employee, it is treated as a benefit in kind. You must pay Class 1A National Insurance contributions at 15% for the 2025/26 tax year, while the employee will pay income tax on the value of the benefit

Since 6 April 2023, employers have also been required to pay a separate Health and Social Care Levy of 1.25%. This levy applies to employee earnings, including those of individuals above state pension age. However, existing reliefs continue to apply for apprentices under 25 and employees under 21 earning less than £50,270 per year

While National Insurance rates have increased, the threshold at which contributions become payable has also risen. This helps to reduce the overall cost or offset some of the additional liability for both employer and employee

Certain health benefits are exempt from tax and National Insurance, meaning there is no need to report them to HMRC. These include:

• One annual medical check-up or health screening
• Medical insurance or treatment provided to an employee working overseas

1.6 Pension Contributions

‍Once you’ve set up an agreement with a pension provider, you can begin contributing to your pension and benefit from 100% tax relief as an allowable business expense

For the 2025/26 tax year:

1. The annual allowance remains at £60,000
2. This covers all your pension contributions across personal and workplace schemes
3. Contributions above this limit may be subject to a tax charge

Additional considerations:

1. If your threshold income exceeds £200,000 and your adjusted income exceeds £260,000, your annual allowance is tapered down by £1 for every £2 over the £260,000 limit, to a minimum of £10,000
2. If you've accessed your pension flexibly, the Money Purchase Annual Allowance (MPAA) applies, reducing your contribution limit to £10,000
3. You can carry forward unused allowance from the previous three tax years, provided you were a member of a registered pension scheme in those years
4. Personal contributions attract tax relief up to 100% of UK earnings or £3,600, whichever is higher
5. The Lifetime Allowance was abolished from 6 April 2024, removing the cap on total pension savings

Pension decisions can be complex and may have long-term implications. We recommend speaking with a qualified financial advisor before making contributions.

Resource: HMRC: Pension schemes rates

2. Business Travel and Mileage Expenses

If you operate through a limited company, you’re eligible for reimbursement of certain travel expenses, but only when the journey is strictly for business purposes. Routine commuting or personal trips? Those don’t qualify.

2.1 Limited Company Mileage Allowance

If you use your personal vehicle for business travel, your company can reimburse you using HMRC approved mileage rates. These rates cover fuel, wear and tear, and general running costs

HMRC-approved mileage rates for 2025/26:

What counts as business travel:

Qualifying journeys include:

1. Travel between two different workplaces for the same job
2. Travel from home to a client or temporary workplace
3. Business travel to attend meetings or perform services away from your normal place of work
4. Deliveries or site visits

Important notes:

1. Journeys between home and your regular office are classed as ordinary commuting and are not allowable
2. You must retain a mileage log with journey dates, locations, purpose and distance
3. If your company owns the vehicle, you may not claim mileage – only the actual costs of fuel and running expenses, and you may be liable for Benefit in Kind tax on private use

‍Note: You can only claim the cost of fuel if your company owns the car.

Resource: HMRC: Travel - mileage and fuel rates

2.2 Business Travel Expenses

You can also claim for other business-related travel costs, as long as the travel is not part of your regular commute and is directly linked to your company’s operations

Allowable expenses include:

1. Public transport fares (train, bus, coach, underground)
2. Taxis or ride-hailing services (e.g. Uber) for business journeys
3. Airfare and ferry tickets for work-related travel
4. Hotel or serviced accommodation for overnight stays
5. Meals incurred as part of an overnight business trip
6. Parking fees, tolls and congestion charges
7. Vehicle running costs if not claiming mileage (fuel, servicing, insurance – only where directly attributable to business use)

Non-allowable travel includes:

1. Commuting from home to a permanent workplace
2. Any personal portion of a mixed-purpose journey
3. Meals or accommodation when no overnight stay is involved

3. Office and Premises Costs

This section breaks down what your company can claim for office expenses, whether you’re running things from home or have a separate office. Just make sure your claims are exclusively for business.

3.1 Use of Home as Office - Limited Company

If you work from home, you have two options for claiming home office expenses.

3.1.1 Claiming a Flat Rate (Recommended for Most)

If you work from home, HMRC allows you to claim £6 per week (equivalent to £312 per year) as a flat-rate expense without the need for receipts

1. This is not treated as a benefit in kind
2. No personal tax or National Insurance applies
3. It's ideal for directors with minimal home office use or those preferring simplicity

Resource: HMRC: Use of home as office

3.1.2 Apportionment of Household Costs (Complex)

If you use a room in your home regularly and substantially for business, you may claim a proportion of household bills. This approach can be more accurate than the flat rate, but requires supporting records

Allowable expenses include:

1. Utilities such as electricity, gas and water
2. Broadband and telephone services
3. Rent (if you’re renting your home)

Note: Council tax and mortgage interest are only claimable if you're self-employed, not through a limited company. Mortgage capital repayments are not allowable under any structure

To calculate the business use:

1. Count the number of rooms in your home
2. Identify how many are used for business
3. Estimate the proportion of time the room is used for work
4. Apply this percentage to the relevant household costs

Example: 1 business-use room in a 5-room home, used 50% of the time → 10% of eligible household bills

3.2 Office Rent and Business Premises

If you rent commercial office space or business premises, the full rent is an allowable expense.

1. A formal rental agreement must be in place between you (as homeowner) and your company
2. Rent should reflect the market value for the space used
3. Rental income must be reported on your Self Assessment, but can be offset by allowable costs
4. Without a formal agreement, payments from the company may be treated as a benefit in kind, triggering additional tax

The rules can be complicated, so we recommend consulting an accountant before you set up a rental agreement.

3.3 Office Equipment and Supplies

These are everyday costs that help you run your business and are immediately deductible in full.

Examples include:

1. Postage and courier services
2. Stationery and general office supplies
3. Printer ink and consumables
4. Books, journals or subscriptions relevant to your business
5. Software subscriptions (e.g. Microsoft 365, Xero)
6. Accountancy and bookkeeping fees
7. Business banking and transaction charges
8. Business telephone and broadband (pro-rated if shared with personal use)

All items must be used exclusively for business; personal use should be excluded from claims

3.4 Larger Equipment and Capital Items

Higher-value or longer-lasting items used in your business can be claimed as capital assets under Annual Investment Allowance (AIA) or Full Expensing, rather than as everyday expenses

Examples include:

1. Laptops, monitors, printers and accessories
2. Office chairs, desks and shelving
3. Perpetual software licences or multi-year purchases
4. Mobile phones used solely for business

Assets must be used wholly for business purposes. Where personal use is involved, only a business proportion may be claimed

3.5 Plant and Machinery

This covers more substantial or operational equipment used in the delivery of services, manufacturing or trade, beyond standard office functions

Examples include:

1. Tools and machinery for construction or manufacturing
2. Vehicles used solely for business (excluding cars unless fully electric and compliant)
3. Equipment used in workshops or warehouses
4. Heavy-duty computing or technical systems

From 1 April 2023, the previous 130% super-deduction and 50% first-year allowance ended. These applied only to corporation tax-paying companies and are no longer available in 2025/26

For the current tax year:

1. Businesses can claim 100% tax relief under the Annual Investment Allowance (AIA) — up to £1 million annually
2. Full Expensing is available for new and unused main rate assets
3. Writing Down Allowances (WDA) apply where AIA or full expensing is not claimed

Claims must be supported with purchase documentation and proper accounting treatment

Resource: HMRC: Annual Investment Allowance

4. Phone and Internet Costs

4.1 Mobile Phone Expenses

If the contract is in the company’s name

1. The full cost of the mobile phone bill can be claimed as a business expense
2. There must be no significant personal use to avoid triggering a benefit-in-kind
3. No benefit-in-kind arises where the mobile contract is used strictly for business and provided to an employee or director

If the contract is personal

1. You can only claim the cost of individual business calls
2. These must be clearly identifiable, and itemised bills are required as evidence
3. You may also reclaim the VAT on the business element if you’re VAT registered

Further information is available in our guide to claiming mobile phone expenses when self-employed.

Recommendation: If you need a business phone, get a separate contract in the company name. It's cleaner, simpler, and fully deductible.

Resource: HMRC: Mobile phones

4.2 Landline Expenses

Business-only landline

1. If the contract is in the company’s name and used exclusively for work, the full cost is an allowable expense

Personal landline with business use

1. You may claim the cost of identifiable business calls
2. You must retain itemised phone records as evidence
3. Line rental or inclusive minutes are not deductible unless the phone is used exclusively for business

4.3 Broadband Expenses

Broadband contract in the company’s name

1. If the connection is used wholly and exclusively for business, you may claim the full cost
2. If there is any significant personal use, it will trigger a benefit-in-kind charge, and the company must report it via PAYE or a P11D

Broadband contract in your personal name

1. You may claim the business-use proportion of your broadband costs
2. You’ll need to show how usage is split between business and personal (e.g. based on working hours or bandwidth use)
3. Claims should be reasonable and evidence-based (such as a log of working days or itemised usage)

Reality check: Proving exclusive business use of home broadband is difficult. Most contractors find it's not worth the complexity and potential HMRC challenge. The home office flat rate (£6/week) already provides an allowance without needing to justify broadband specifically.

5. Professional Services and Fees

5.1 Accountancy and Bookkeeping

All accountancy and bookkeeping services are fully deductible.

Allowable services:

• Annual accounts preparation
• Corporation Tax return filing
• VAT return preparation and submission
• Payroll processing
• Tax planning and advice
• HMRC enquiry support
• Bookkeeping services

Professional fees are one of the clearest allowable expenses. Keep all invoices from your accountant.

5.2 Legal Fees

Legal costs are allowable if directly related to your business operations.

Allowable:

• Contract review and drafting
• Business dispute resolution
• Employment law advice
• Intellectual property protection
• Business-related litigation costs
• Debt recovery

Not allowable:

• Personal legal matters
• Capital transactions (buying property, company acquisitions)
• Fines and penalties

5.3 Other Professional Services

• Architect or surveyor fees for business premises
• Business consultancy and advisory services
• IT support and technical services
• Marketing and PR consultancy
• Recruitment agency fees
• Health and safety consultants

All must be genuinely for business purposes with proper invoices retained.

6. Insurance

6.1 Business Insurance Policies

Insurance premiums are fully deductible as business expenses when the policy is directly related to business activities.

Common allowable policies:

• Professional indemnity insurance – Protects against claims of negligence
• Public liability insurance – Covers injury/damage claims from third parties
• Employer's liability insurance – Mandatory if you employ staff (£5 million minimum cover required by law)
• Business contents insurance – Protects equipment and stock
• Business interruption insurance – Covers loss of income
• Cyber insurance – Protection against data breaches and cyber attacks

Resource: Employers' Liability (Compulsory Insurance) Act 1969

6.2 Private Medical Insurance

If you provide private medical insurance for employees, it's treated as a benefit in kind.

Tax treatment:

• Company can claim the premium as business expense
• Company pays Class 1A NI at 13.8% on the benefit value
• Employee pays income tax on the benefit (reported on P11D)

Exempt health benefits (no tax or reporting):

• One annual medical check-up or health screening
• Medical insurance for employees working overseas

Resource: HMRC: Medical treatment

7. Marketing and Advertising

All genuine marketing costs aimed at promoting your business are allowable.

Common examples include:

1. Website creation and development costs
2. Hosting fees and domain name registrations
3. Online advertising (e.g. Google Ads, LinkedIn)
4. Print advertising (e.g. flyers, newspapers)
5. PR agency or freelance marketing consultant fees

Entertaining clients or hospitality for promotional purposes is not an allowable marketing cost

8. Training and Professional Development

You can claTraining costs are allowable if they maintain or improve skills you use in your current business.

8.1 Training Courses

Claimable if:

• The course enhances your current skills or supports your existing role
• It is not aimed at learning a new trade or entering a new market

Not allowable:

• Courses for a new qualification unrelated to your current business activity
• Courses intended to help you change profession

8.2 Professional Subscriptions

You can claim the cost of memberships or subscriptions if:

• The organisation is HMRC-approved (see their list of professional bodies)
• The subscription is relevant to your business activity

9. Bank Charges and Finance Costs

9.1 Bank and Credit Card Charges

Allowable:

• Business bank account fees
• Credit card transaction charges
• Merchant service fees for card payments
• Overdraft interest
• Currency conversion fees for business transactions
• International transfer charges

Not allowable:

• Personal bank charges
• Late payment fees on personal accounts
• Charges related to personal spending

Use a dedicated business bank account to keep everything separate.

9.2 Loan Interest

Interest on business loans is allowable. Capital repayments are not.

Example: Your company has a £20,000 business loan.

• Monthly payment: £500
• Interest portion: £150 → Allowable expense
• Capital repayment: £350 → Not allowable (it's paying back what you borrowed)

Keep loan statements showing the breakdown between interest and capital.

9.3 Bad Debts

If a customer fails to pay an invoice, you can claim it as a bad debt expense once you've written it off.

Conditions:

• The unpaid amount must have been included in your company's turnover
• You must have taken reasonable steps to recover the amount
• The debt must be genuinely irrecoverable (not just late)
• Formally written off in your accounts

You can't claim for late payments that you still expect to receive.

10. Miscellaneous Allowable Expenses

10.1 Eye Tests and Glasses

If you regularly use screen-based equipment (computers) for work, the company can pay for:

• Eye tests
• Glasses or contact lenses specifically prescribed for VDU (visual display unit) use

Resource: HMRC: Eye tests

10.2 Books, Journals and Magazines

You may claim for business-relevant reading materials such as:

• Trade journals
• Industry magazines
• Specialist publications related to your services or sector

Personal interest magazines aren't deductible, even if loosely related to your industry.

10.3 Company Formation Costs

Initial costs of setting up your limited company are generally allowable.

Examples:

• Companies House registration fee (£50-71)
• Accountant or formation agent fees
• Initial professional advice (legal, accounting)
• Domain name registration for company website
• Initial office supplies needed to commence trading

10.4 Charitable Donations

Donations to registered UK charities don't reduce your trading profits, but they do reduce your Corporation Tax liability.

Allowable donations:

• Cash donations to registered charities
• Equipment or trading stock
• Land, property, or shares (excluding your own company's shares)
• Employee time (e.g., secondment to charity)
• Sponsorship payments (if commercial in nature)

Donations are deducted when calculating your Corporation Tax, not when calculating trading profit. There's a subtle but important difference in how they're treated on your accounts.

Resource: HMRC: Charitable donations relief for companies‍

10.5 Website Development Costs

You may claim website development costs as a business expense if the site is used to generate or support income

Allowable elements include:

• Design and development fees
• Hosting and maintenance
• Content creation (copywriting, photography, SEO)

If the website has a long-term value to the business, these costs may be treated as capital expenditure and written off over time.

It is always good to speak to your accountant to determine eligibility.

Understanding what’s off-limits is just as crucial as knowing what’s allowed. Make a mistake here and you’re basically inviting HMRC to take a closer look.

1. Client Entertainment

Client entertainment is where people trip up the most. No matter how justified it seems from a business perspective, you can’t claim tax relief for entertaining clients, customers, or prospects. HMRC simply doesn’t permit it.

Not allowable:

• Taking clients to lunch or dinner
• Hospitality at sporting events
• Theatre or concert tickets for clients
• Corporate entertaining at events
• Drinks with prospective customers

Why? HMRC's view is that entertainment is a personal benefit to the recipient, not a business expense.

The cost comes from post-tax profits. Your company can pay for it, but you won't get Corporation Tax relief.

Resource: HMRC: Entertainment expenses

2. Personal Expenses

Any expense with personal benefit is disallowable.

Common examples:

• Personal gym membership
• Personal clothing (suits, everyday wear)
• Personal grooming (haircuts, cosmetics)
• Personal subscriptions (Netflix, Spotify)
• Personal mobile phone bills
• Personal meals during normal working hours
• Personal travel costs

The "wholly and exclusively" rule catches these. If there's personal benefit, it's not allowable.

3. Fines and Penalties

You can never claim tax relief on fines, penalties, or similar costs.

Not allowable:

• Parking fines
• Speeding tickets
• Late filing penalties
• HMRC penalties
• Court fines
• Penalty charges from suppliers

Why? HMRC's position is clear: penalties for breaking the law shouldn't be subsidised through tax relief.

4. Capital Expenses

Major purchases aren't expensed immediately; they're treated as capital expenditure.

Examples:

• Purchasing property
• Buying vehicles
• Major equipment purchases (though often covered by Annual Investment Allowance)
• Renovations and improvements (repairs are allowable, improvements aren't)
• Acquiring another business

Capital expenses are typically claimed through capital allowances over several years, not as immediate business expenses.

5. Dividends

Paying out profits to shareholders isn’t an expense. You distribute Dividends from profits after tax and they are subject to dividend tax rather than being deductible as an expense.

How it works:

1. Your company makes profit
2. Corporation Tax is paid on that profit
3. Remaining profit can be distributed as dividends
4. Dividends are subject to dividend tax on your personal tax return

Dividends don't reduce your company's taxable profit.

6. Private Health Insurance (Personal)

Private medical insurance premiums for yourself as a director are not allowable as a business expense. They're treated as a benefit in kind, meaning:

• The company can pay the premium
• The company pays Class 1A NI (13.8%)
• You pay income tax on the benefit value
• No Corporation Tax relief

For most directors, this makes it less tax-efficient than paying from personal funds.

7. Commuting Costs

Your regular journey from home to your permanent workplace is ordinary commuting and isn't allowable.

Not allowable:

• Daily drive from home to your permanent office
• Train season ticket for commuting
• Parking at your permanent workplace
• Bicycle purchased for commuting

This applies even if your office is 50 miles away. The distance doesn't change the nature of ordinary commuting.

Look, claiming tax deductible expenses as a limited company isn’t complicated once you’ve wrapped your head around the basics. Just keep your records organised (trust me, your accountant will thank you), know exactly what qualifies as a business expense, and make sure everything’s submitted correctly when it’s time to file.

Here’s the process, step by step:

Step 1. Know What Qualifies

HMRC isn’t going to let you slip through with random receipts. In the UK, expenses need to be purely for business. No mixing personal spends with company stuff.

Step 2. Keep Accurate Records

Maintain detailed records of your expenses, including receipts, invoices, and supporting documents. These records will serve as evidence to support your claims and comply with HMRC requirements.

You can consider using below for accurate record keeping for your limited company:

• Use accounting softwares like FreeAgent to keep track of your business expenses.
• Use accountants for limited company to keep records of your expenses.
• Use electronic recording system to documentise records.
• Use annual expense spreadsheet to capture all the spend and amend it throughout the year.

Step 3. Sort Expenses Into Clear Categories

Don’t just lump everything together. Break it down inproper categories - office costs, travel, professional fees, marketing. The more organised you are now, the less you’ll need to run during the tax time.

Step 4. Use the Correct Payment Method

Always pay business expenses from your company account if you can. If you pay out of pocket, log it and reimburse yourself properly, backed up with receipts, obviously.

Step 5. Complete Your Self-Assessment Tax Return

If you're self-employed or a director of a limited company, you will need to file a self-assessment tax return. Include your tax-deductible expenses in the relevant sections of the form, such as the "Self-Employment" or "Business Expenses" section.

Step 6. Bring in an Expert When Needed

If you’re not sure what counts or how to claim, get a professional limited company accountants. They’ll help you avoid mistakes and probably save you more than they cost.

Step 7. Keep Your Records Safe

Keep your expense records and supporting documents for at least six years. If HMRC wants to see them, you need to have them ready - no ifs, no buts.

1. Operating Expenses:
   - Rent and utilities
   - Office supplies and equipment
   - Insurance premiums
   - Business rates
   - Telephone and internet expenses
   - Property maintenance and repairs
   - Business insurance
2. Professional Services:
   - Accounting and bookkeeping fees
   - Legal fees
   - Consultancy and advisory services
   - IT and software services
   - Marketing and advertising expenses
   - Professional membership fees
   - Training and development costs
3. Staffing Expenses:
   - Employee salaries and wages
   - Employer National Insurance contributions
   - Pension contributions
   - Recruitment expenses
   - Staff training and development costs
   - Employee benefits (such as health insurance)
4. Travel and Subsistence:
   - Business-related travel expenses
   - Accommodation costs during business trips
   - Meals and entertainment expenses
   - Mileage or vehicle expenses
5. Business Premises:
   - Rent or mortgage payments for business premises
   -Property insurance
   - Business rates and council tax
   - Maintenance and repairs
6. Office Expenses:
   -Office furniture and equipment
   - Printing and stationery
   - Computer hardware and software
   -Postage and delivery costs
7. Marketing and Advertising:
   - Website development and maintenance
   - Advertising campaigns
   - Graphic design and printing
   - Online marketing expenses
8. Financial and Bank Charges:
   - Bank fees and charges
   - Merchant service fees
   - Interest on business loans or overdrafts
   - Professional fees for financial services

Many contractors and small business owners manage their expenses on their own quite effectively, while some prefer to bring in a professional. So, how do you know what’s right for you?

When Managing Expenses Yourself Makes Sense

You can probably handle expenses yourself if:

• Your expense patterns are straightforward and consistent
• You're comfortable with basic bookkeeping
• You use accounting software (FreeAgent, Xero, etc.)
• Your main claims are: mileage, office supplies, subscriptions, professional fees
• You have 2-3 hours monthly for bookkeeping
• You're willing to read HMRC guidance when questions arise

Self-service tools:

• HMRC's Business Income Manual (free, comprehensive)
• Expense tracking apps (MileIQ, Expensify)
• Accounting software with expense categorisation
• HMRC's online helpline: 0300 200 3410

Time investment: Typically 2-3 hours monthly for tracking and categorisation.

Suitable for: Simple expense patterns, minimal complexity, established routines.

When Professional Help Adds Value

Consider accountant support when you face:

Complex situations:

• Multiple income streams or business structures
• R&D tax credit potential
• Capital vs. revenue expense determinations
• International transactions or VAT complexities
• HMRC enquiry or investigation
• Significant capital allowances planning

How GoForma Helps You Claim Tax-Deductible Limited Company Expenses

Understanding HMRC’s expense rules isn’t exactly anyone’s cup of tea. That’s why GoForma steps in to simplify the process. Our team of experienced accountants for limited companies knows exactly what’s allowable, so you’re not left second-guessing your claims or leaving money on the table.

And we go beyond just offering advice. Our bookkeeping services keep your records organised and accurate throughout the year, so you’re always prepared (and avoiding last-minute chaos). We also include FreeAgent accounting software at no extra cost, giving you clear, up-to-date visibility over your business’s finances at any time.

Whether you’re a contractor, freelancer, or owner of a growing business, we’ll clarify what expenses you can claim, how to record them, and when to submit. That means fewer missed opportunities, reduced tax bills, and more capital staying in your business.

Book a free consultation with a qualified accountant for a limited company today and get professional help to make the most of your tax-deductible business expenses.

FAQs on Allowable Expenses for Limited Companies

1. How Much Does an Accountant Cost for a Limited Company in 2025?

The limited company accountants cost in 2025 can vary depending on factors such as the size and complexity of your business, the scope of services required, and the accountant's location and experience. On average, you can expect fixed fee packages ranging from £79 to £200 per month. Additional services and online accounting software may have separate costs.

2. Can I claim my business vehicle as a tax deduction if I don't own it myself?

‍Yes, you can claim your business vehicle as a tax deduction even if you don't own it yourself. If you use a vehicle for business purposes, you can claim the expenses associated with its use as a tax deduction. This applies whether you buy the vehicle, lease it, or use it under a hire or rental agreement. However, consulting with an accountant or tax advisor is recommended to ensure compliance and maximise your eligible deductions.

3. Can I claim buying assets as a business expense?

No, buying assets is classed as a capital expense, not a regular business expense. However, you can claim tax relief on assets through capital allowances, depending on the type of asset and its use.

4. Can I claim rent as a business expense limited company?

‍Yes, you can claim rent as a business expense for your limited company as long as it is incurred solely for business purposes.

5. What is tax relief for limited companies?

Tax relief for limited companies reduces the amount of tax your company pays. It includes deductions for allowable expenses, capital allowances, R&D tax credits, and reliefs like the Annual Investment Allowance.

6. Do I pay less tax if I claim more expenses?

Yes. Claiming more allowable expenses reduces your company’s taxable profit, which means you pay less Corporation Tax.

7. How to keep a record of my Limited company business expenses?

Keep receipts, invoices, and bank statements for every business purchase. Store them digitally in accounting software like FreeAgent for easy tracking and year-end reporting.

8. Can I claim buying assets as a business expense?

When you buy assets for your business, the cost is treated as a capital expense rather than a regular business expense. This means you can’t claim it in the usual way, but you might be able to get tax relief through capital allowances.

9. Will HMRC ask for proof of expenses?

Yes. HMRC can ask to see receipts, invoices, or other records to confirm your expense claims, so it’s important to keep them safe for at least six years.

10. Can I claim lunch as a business expense?

You can only claim lunch as a business expense if it’s for a business trip or meeting away from your usual place of work. Everyday meals are not allowable.