Running a limited company involves many day-to-day business costs. Knowing which expenses are allowable can help reduce your Corporation Tax bill and ensure your company only pays the tax it legally owes.
In general, an expense is allowable if it is wholly and exclusively for the purposes of your business.
Common Allowable Business Expenses
- Office rent and business rates
- Electricity, gas and water for business premises
- Telephone and internet costs
- Office supplies and stationery
- Computer equipment and software
- Business insurance
- Professional fees, including accountancy and legal fees
- Advertising and marketing costs
- Business travel, including train, taxi and parking
- Business mileage where applicable
- Employee salaries and employer National Insurance contributions
- Pension contributions for employees
- Bank charges and business loan interest
- Training courses that relate to your existing business
Expenses That Are Usually Not Allowable
- Personal expenses
- Client entertaining
- Fines and penalties
- Personal clothing, unless it is a recognised uniform or protective clothing
- Costs that are not wholly and exclusively for the business
Keeping Accurate Records
HMRC requires businesses to keep accurate records of their income and expenses. Maintaining organised bookkeeping throughout the year makes preparing your annual accounts and Corporation Tax Return much easier.
Frequently Asked Questions
Can I claim my mobile phone bill?
If the phone is used for business purposes, some or all of the cost may be allowable depending on the circumstances.
Can I claim working from home expenses?
If you work from home, your company may be able to claim certain business-related household costs, depending on how your home is used for business.
Can my company pay for my training?
Training that updates or improves skills relevant to your existing business is generally allowable, whereas training for a completely new trade or profession may not be.