When running a limited company, you will incur a wide number of limited company expenses during the course of your work, ranging from printing and postage costs to purchasing computer equipment.
Only genuine expenses are allowable
The golden rule for all expense claims is that you can only reclaim for expenses which have been incurred wholly, exclusively and necessarily in the course of running your company.
Additionally, you cannot claim for expenses which have a dual purpose (i.e. for both personal and business use).
You should always ensure that you keep all of your receipts and invoices in order to prove that any claims you have made have been legitimate.
If you are in any doubt over what you can and can’t claim through your limited company, ask your accountant.
Typical limited company expenses
In principle, your company can deduct from turnover any type of expenses which aren’t specifically disallowed by HMRC, or capital expenditures.
Here are some of the main business expenses you can set off against Corporation Tax (unless otherwise stated):
- Executive pension contributions (via an approved scheme).
- Employers’ national insurance contributions (NICs) payable on salaries paid to company employees.
- The cost of subsistence while away from your workplace (no claims after 24 months for subsistence the same ‘temporary workplace’).
- Accommodation costs when away from normal place of business (although must not exceed 24 months at a ‘temporary workplace’).
- Travel and parking costs, mileage allowance if using own vehicle of 45p/mile for the first 10,000 miles, and 25p/mile thereafter. 20p/mile rate for bicycles. See our guide to travel expenses.
- Training course fees as long as the skills are relevant to the business.
- Stationery, postage, and printing costs.
- Business insurance, such a professional indemnity insurance. See our guide to insurances you can claim against your company.
- Company formation and ongoing costs (e.g. Annual Return fee), although the company formation fee is a ‘capital cost’, and cannot be set off against Corporation Tax.
- Telephone and broadband packages (if the contract is in the company name).
- Mobile and Smartphones (if the contract is in the company name).
- The cost of business calls can be reclaimed on a residential phone bill.
- Home office costs (a flat £4/week without receipts is allowed by HMRC, or work out a proportion of the household bills).
- Computer equipment and software.
- Costs of advertising and marketing your business.
- Business gifts up to £50 per individual are allowable before more complex rules apply.
- Incidental overnight expenses of £5/night (£10/night if overseas) can be claimed as a flat rate if you are working away from home.
- Authorised bank charges, e.g. standing charges each quarter.
- Christmas party exemption for directors and employees of £150 per person per year (you can include your partner or spouse).
- Professional fees, such as accountant or solicitor.
- A limited number of professional subscriptions, if allowed by HMRC.
- Capital allowances (depreciation of assets).
- Business magazines and books.
- An eye test for employees who use computer equipment.
- An annual private health check for employees.
- Hire purchase agreements (in the company name).
- Company car expenses (benefit in kind charge for private use).
You can also claim for all expenses you may have incurred personally for business purposes prior to company formation. Read our guide here.
Each expense listed here could be the subject of an article in its own right, and we will shortly be providing further guides to specific expenses on Company Bug.
You can access HMRC’s A-Z of expenses and benefits here.
Larger company asset purchases are treated differently to business expenses. Read our guide to the treatment of company assets for more details.
This article is just for guidance only. Expense claims are a complicated area of taxation, and you should always consult your accountant if you have any questions.
You can also seek advice from your limited company accountant if you are unsure on any expenses.