What business expenses can I claim as a Limited Company?

Limited Company Expenses Guide (UK, 2025)

Are you a seasoned director running a Limited company, or just starting out for the first time? Whatever stage you’re at, it’s easy to overlook certain business expenses — which means you could be paying more tax than necessary.

This article will guide you through the most common HMRC-approved business expenses you can claim as a Limited company, explain how tax relief works, and show you the best way to keep records so you stay compliant.

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Why Claiming Business Expenses Matters

Being smart with expenses is a vital part of running a successful business. Every allowable cost you claim reduces your company’s taxable profit, which in turn lowers your Corporation Tax liability.

The key rule is that expenses must be “wholly, exclusively and necessary” for business purposes. However, HMRC’s rules are not always straightforward. They are often based on concepts such as fairness and reasonableness, and some expenses may also affect your personal tax.

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What Is Tax Relief for Limited Companies?

Tax relief allows Limited companies to reduce their Corporation Tax bill by offsetting certain allowable costs against profits. The more allowable expenses you record, the lower your taxable profit.

⚠️ To stay compliant, you must:

• Only claim costs on HMRC’s approved list.
• Keep detailed records and receipts for at least six years.
• Avoid mixing personal and business expenses.

If in doubt, always seek professional advice from an accountant.

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How to Claim Expenses

Expenses can be paid in two ways:

1. Directly from the company bank account – recommended, as it keeps things clear and avoids missed claims.
2. Reimbursed to you personally – if you pay for something yourself, you can reclaim the cost from the business, but must keep accurate records of reimbursement.

If you employ staff, it’s good practice to have a formal expense policy and use standard forms. Staff must always keep receipts in order to reclaim costs.

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Recording Business Expenses

Keeping clear, accurate records is essential. Without evidence, HMRC may reject your claim.

Tips for tracking expenses:

• Business mileage – record each journey, date, purpose and miles travelled. Use a spreadsheet or mileage app (our Tripcatcher app automates this).
• Fuel claims – keep all receipts if claiming tax relief for company car fuel.
• Supplies and equipment – you don’t need to record every item individually (e.g. 10 packs of pens can be recorded as 1,000 pens), but receipts must be stored.
• Travel & subsistence – meals are claimable if you’re away for over 5 hours (lunch) or 10 hours (dinner). Keep receipts.
• Digital storage – always back up receipts; paper copies fade over time. Our Snap app allows you to take photos and upload directly to your account.

👉 Receipts must be retained for six years after your returns are filed.

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Common Allowable Expenses for Limited Companies

Below is a breakdown of the most frequently claimed expenses and how HMRC treats them.

Expense Type	Claimable?	Notes
Advertising, marketing & PR	✅ Yes	Campaigns, ads, and PR are allowable. Client entertainment is not.
Business travel	✅ Yes	Mileage, hotels, subsistence, parking, tolls. Commuting is excluded.
Childcare	❌ No	Not an allowable expense. Use Tax-Free Childcare personally.
Entertainment	⚠️ Limited	Staff events allowed if ≤ £150 per head annually. Client entertainment not claimable.
Eye tests	✅ Yes	Fully allowable if required for screen work. Glasses claimable only if prescribed for VDU use.
Company formation costs	✅ Yes	100% allowable. Includes domain registration.
Professional fees	✅ Yes	Accountancy, legal and consultancy costs wholly for the business.
Phone & broadband	⚠️ Sometimes	Fully allowable if in the company’s name and used only for business.
Premises / Rent	✅ Yes	Business premises are claimable. Home office claims vary (see below).
Subscriptions	⚠️ Sometimes	HMRC-recognised professional memberships relevant to your trade.
Training courses	⚠️ Sometimes	Only when directly relevant to your role.
Work clothing	⚠️ Sometimes	Uniforms, protective clothing, or branded wear. Not normal clothes.
Working from home	✅ Yes	£6 per week flat rate, or a proportion of actual costs.

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Detailed Expense Categories

Accountancy Fees

• 100% claimable if related to company accounts.
• Personal tax return preparation is a Benefit in Kind (BIK) and taxable.
• Employers pay 15% NIC on BIKs (2025/26 rate).

Accommodation & Travel

• Hotels and overnight stays for business are claimable if reasonable.
• HMRC may challenge excessive claims (luxury hotels, large apartments).
• Meals while travelling for business are allowable if working long hours.

Advertising & Marketing

• Costs of digital ads, SEO, lead generation, PR campaigns and sponsorship are allowable.
• Client lunches, hospitality and gifts are not.

Bank Charges & Financial Costs

Allowable:

• Business bank charges and card fees
• Interest on business loans
• Hire purchase interest
• Leasing payments

Not allowable:

• Personal loans or overdrafts
• Repayment of loan capital

Insurance Policies

Claimable if related to the business, e.g.:

• Professional indemnity insurance
• Public liability insurance

Mileage & Company Vehicles

If using your personal car for business travel:

• Cars/vans: 45p per mile (first 10,000 miles), then 25p
• Motorbikes: 24p per mile
• Bicycles: 20p per mile

If the company owns the vehicle:

• You can claim fuel, insurance, servicing, breakdown cover.
• Non-business mileage is not allowable.

Charitable Donations

Your company can donate:

• Money, stock, equipment, property, or seconded staff.
• Tax relief is given by deducting the donation value from profits before tax.

Staff Events & Benefits

• Annual events (e.g. Christmas party) are allowable if ≤ £150 per head.
• Trivial benefits (under £50, not cash, not linked to work performance) are allowable.

Office Equipment & Furniture

• Computers, printers, phones, software and office furniture are allowable if mainly for business use.
• Personal use must be insignificant.

Training Courses

• Claimable if directly improving your current business skills.
• Not usually allowed for qualifications like MBAs (which provide new skills).

Working from Home

• Flat rate: £6 per week (£312 per year), no evidence needed.
• Alternatively, claim a proportion of household bills (utilities, broadband, insurance) if you can prove business use.
• Renting your home office to your company requires a formal agreement and must be “fair and reasonable.”

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Expenses You Cannot Claim

• Ordinary commuting
• Personal childcare
• Non-business clothing
• Client entertainment
• Parking fines and penalties
• Repayments of personal loans or overdrafts

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Why Good Records Matter

• HMRC requires you to keep records for at least six years.
• Missing or vague records can lead to rejected claims.
• Digital backups of receipts protect against fading or loss.
• Using accounting software saves time and reduces errors.

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Final Thoughts

Claiming every allowable business expense helps reduce your Corporation Tax bill and keeps your Limited company financially efficient. The guiding principle is simple:

If it’s wholly, exclusively and necessary for your business, it’s usually claimable.

But because HMRC rules can be complex, it’s wise to seek advice if you’re unsure.

✅ At Adena Accountancy, we help directors and small businesses make the most of tax relief, while ensuring compliance. From tracking mileage to managing home office claims, our tools and expert support make accounting straightforward.