There is a range of expenses you can claim for whilst running your business. 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.
What expenses are allowable?
Only reclaim for expenses which have been incurred wholly, exclusively and necessarily in the course of running your company. This is the golden rule that all limited company directors should abide by when claiming for expenses
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.
What are typical limited company expenses?
Limited company expenses can vary, from travel costs to business insurance, 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):
The salary you pay your employees or yourself as an employee of a limited company can be claimed.
Executive pension contributions
These can be claimed, however, it must be an approved scheme. Therefore, it is worth checking with the HMRC or your accountant to see if this is an expense you can claim.
Employers’ national insurance contributions
National Insurance Contributions (NICs) payable on salaries paid to company employees can be offset against your corporation tax.
Cost of subsistence
The cost of subsistence while away from your workplace (no claims after 24 months for subsistence the same ‘temporary workplace’).
You can claim accommodation costs when away from the normal place of business (although must not exceed 24 months at a ‘temporary workplace’).
Travel and parking costs
Any travel costs that have incurred during the course of business activities can be claimed. This includes any kind of travel from air travel to trains and buses. The 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. This applies to any training courses or your employees take that are business related.
You will need office supplies including stationery, postage, and printing costs, all of which are claimable expenses.
As a business owner, you will likely at least have one kind of business insurance. The most popular types of business insurance such as public liability, employers liability, legal expenses, tax investigation, and professional indemnity insurance are all legitimate business expenses, and attract no benefit in kind charges. 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 of any telephone and broadband packages for your business is in the company name, then it can be a claimable expense.
Mobile phone contract
Mobile and Smartphones (if the contract is in the company name). This obviously applies to any business related smartphone you have. Additionally, it applied to any employees you provide a mobile phone for. You can reclaim the cost against Corporation Tax, and the employee will not pay tax on the benefit for the first handset provided.
The cost of business calls can be reclaimed on a residential phone bill. This can be especially important if you are having to make international calls to clients.
Home office expenses
Home office costs (a flat £4/week without receipts is allowed by HMRC, or work out a proportion of the household bills).
This will include any Computer equipment and software that you will be using for your small business.
Advertising and marketing
With any business, you will incur marketing and advertising costs, and these expenses again can be claimed.
You may give business gifts to clients/partner etc. You can claim on business gifts up to £50 per individual. If the gift exceeds the £50 cost then more complex rules apply.
Incidental overnight expenses
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
The bank charges have to be authorised, for example standing charges each quarter.
Annual Christmas party exemptions
Annual party exemption for directors and employees of £150 per person per year (you can include your partner or spouse). This can be either one party or two, for example, you may choose to have a summer party and a Christmas party. However, if you choose to have two events the cost per individual cannot exceed £150.
Professional fees are any costs that you incurred by using the services of a professional, including accountants and solicitors.
A limited number of professional subscriptions, if allowed by HMRC.
Capital allowances (depreciation of assets).
Business magazines and books
You may use or regularly buy magazines and books for your business, these can be claimable expenses.
An eye test for employees who use computer equipment. The costs of eye tests for employees is allowable and does not attract a BIK charge.
Annual private health check
An annual private health check for employees. Directors and employees can claim for the cost of one private health assessment or health screening each year without attracting a BIK charge.
Hire purchase agreements
Hire purchase agreements are claimable expenses as long as they are in the company name.
Company car expenses
Company car expenses (benefit in kind charge for private use).
What other information do I need to know?
Other information you need to make yourself aware of is that 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 about any expenses.