Key takeaways
- The general rule is that an expense must be wholly and exclusively for the business to be allowable.
- Mileage, use of home as office, and employer pension contributions are among the most commonly underclaimed expenses.
- Trivial benefits let you give small tax-free perks to directors and employees without reporting them.
- Client entertainment is treated differently from staff entertainment, and most client entertaining isn't Corporation Tax deductible.
- Good records — receipts, mileage logs, and a clear business reason for each cost — are what makes a claim stand up.
Every allowable expense a limited company pays for reduces the profit that Corporation Tax is calculated on, which makes getting this right worth real money, not just tidy bookkeeping. Here's what directors can typically claim, and where the boundaries sit.
Quick answer: what's the general rule?
An expense is allowable if it's incurred wholly and exclusively for the purposes of the business. If a cost has a personal element as well as a business one, only the business proportion is usually allowable — and some categories, like client entertainment, have their own specific restrictions regardless of purpose.
Vehicle and travel costs
Directors can claim business mileage at HMRC's standard rates (45p per mile for the first 10,000 miles, 25p after) for using a personal vehicle for company business, or the company can own or lease a vehicle directly, which has its own tax treatment. Travel and reasonable subsistence costs for business trips away from your normal workplace are also allowable.
Use of home as an office
If you work from home some or all of the time, the company can pay you a modest fixed allowance (currently £6 a week without needing detailed evidence) or a calculated proportion of actual household costs, to cover the business use of your home.
Employer pension contributions
Company contributions into a director's pension are usually a deductible business expense and don't count as a personal benefit in kind, which makes pension contributions one of the more tax-efficient ways to extract value from the company compared to additional salary or dividends.
Trivial benefits
Small gifts or perks up to £50 each (and up to £300 a year in total for directors of close companies) can be given tax-free as "trivial benefits" without needing to go through payroll or be reported to HMRC, as long as they're not cash, a reward for performance, or specified in a contract.
Training, subscriptions, and equipment
- Training and courses that maintain or update skills needed for the current role
- Professional body subscriptions relevant to the business
- Equipment, software, and tools used for company work
- Business insurance, including professional indemnity where relevant
Quick reference: what's typically allowable
| Category | Examples | Notes |
|---|---|---|
| Vehicle & travel | Mileage, train fares, reasonable subsistence | 45p/25p mileage rates apply |
| Home office | Fixed £6/week or calculated proportion | No detailed evidence needed for the flat rate |
| Pension | Employer contributions | Deductible, not a benefit in kind |
| Trivial benefits | Small gifts up to £50 each | Up to £300/year for directors |
| Training & subscriptions | Courses, professional body fees | Must relate to the current role |
What's restricted or disallowed
Client entertainment (meals, events, hospitality for customers) is generally not deductible for Corporation Tax, even though the company can still pay for it. Fines and penalties are never allowable. Purely personal expenses run through the company, without a genuine business purpose, risk being treated as a taxable benefit in kind or even director's loan issues.
How Aurestone helps
We review what directors are already claiming, flag commonly missed categories like home office costs and pension contributions, and make sure everything is documented properly to stand up to scrutiny. See our limited company accountant page for the full picture.
What to read next
Sources checked
Checked against HMRC guidance on expenses and benefits for employers and trivial benefits.
Frequently asked questions
Can I claim my home broadband bill?
Only the business-use proportion, unless you have a separate line or contract used solely for company work.
Can the company pay for my gym membership?
Generally no as a straightforward expense — it would usually be treated as a taxable benefit in kind unless it qualifies under a specific exemption.
Can I claim client dinners as a business expense?
The company can pay for it, but it's generally not deductible for Corporation Tax purposes, and VAT treatment has its own separate rules.
What happens if I claim something that isn't really allowable?
It can be reclassified as a benefit in kind (taxed on you personally) or disallowed for Corporation Tax, sometimes with penalties if it looks deliberate. It's worth checking anything you're unsure about before claiming it.
Topics
Limited company accounting
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Next step
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