By
August 11, 2026
What Expenses Can a UK Limited Company Claim?
Running a UK limited company involves costs, from accounting software and advertising to salaries, insurance and office expenses.
Many of these costs can potentially be claimed as business expenses, reducing the company's taxable profit and therefore potentially reducing its Corporation Tax bill.
However, not every payment made by a company is automatically tax deductible.
Whether an expense can be deducted depends on what the company purchased, why the expenditure was incurred and the relevant UK tax rules.
This guide explains some of the main expenses a UK limited company may be able to claim and the important distinction between revenue expenses, capital expenditure and personal spending.
Allowable business expenses are qualifying costs incurred in running the company that can be deducted when calculating taxable profits for Corporation Tax purposes.
A simplified calculation looks like:
Business income – allowable expenses ± tax adjustments = taxable profit
The relevant Corporation Tax rules are then applied to the company's taxable profits.
The important point is that an expense must satisfy the relevant tax rules before it can reduce taxable profits.
When considering whether an expense can be deducted, one of the most important questions is:
Was the expenditure incurred for a business purpose?
Buying something through the company's bank account does not automatically make it an allowable expense.
For example, a genuine business software subscription may potentially qualify.
A personal holiday paid for using the company card does not suddenly become a business expense simply because the company paid for it.
Keeping business and personal expenditure separate makes this distinction much easier.
The costs associated with employing people can represent a significant business expense.
Depending on the circumstances, qualifying employment costs can include items such as:
Companies employing people also need to consider PAYE, National Insurance and payroll reporting requirements.
A director's salary and dividends should not be confused.
Salary can potentially represent an employment cost to the company, whereas dividends are distributions to shareholders and are not normally deducted as ordinary business expenses when calculating Corporation Tax.
Everyday office costs can potentially qualify where they are incurred for the company's business.
Examples may include:
Where something has both personal and business use, additional rules may apply.
Companies should therefore maintain records showing the business reason for the expenditure.
If your company operates from an office, warehouse, shop or other commercial premises, qualifying running costs may potentially be deductible.
These could include:
Purchasing or significantly improving a property is different from paying ordinary running costs and may need to be treated as capital expenditure.
Many directors operate their limited companies from home.
Where a home is genuinely used for business purposes, the company may potentially reimburse or pay certain qualifying costs under the applicable rules.
The correct treatment depends on the arrangement and circumstances.
It is important not to simply charge all household costs to the company.
Only amounts that qualify under the relevant rules should be claimed.
Qualifying accountancy and bookkeeping costs incurred in running the company can generally be relevant business expenses.
Examples may include:
Good bookkeeping can also help identify other deductible expenses that might otherwise be overlooked.
Certain professional fees incurred for legitimate business purposes may potentially qualify.
Examples could include fees for:
However, the tax treatment can differ where professional fees relate to purchasing or disposing of a capital asset.
The purpose of the professional service therefore matters.
Advertising can be a major expense for growing companies.
Qualifying marketing expenditure may potentially include:
Businesses should retain invoices and records showing the commercial purpose of the expenditure.
Most modern businesses incur costs associated with operating a website.
Potential expenses could include:
However, significant website development expenditure can sometimes receive different accounting and tax treatment from ordinary recurring website expenses.
The circumstances should therefore be considered.
Subscription-based software has become a common company expense.
A business might pay for:
Where these services are genuinely required for the company's business activities and meet the relevant rules, the costs may potentially be deductible.
Companies often require several types of insurance.
Depending on the business, qualifying policies might include:
The policy should relate to the business rather than purely personal protection.
Qualifying travel expenses incurred for genuine business journeys may potentially be claimed.
Examples could include travel to:
Potential costs can include qualifying:
However, ordinary commuting between home and a permanent workplace is generally treated differently.
Business travel should therefore be distinguished from normal commuting and personal travel.
If a director or employee uses their own vehicle for qualifying business journeys, the company may potentially reimburse business mileage according to the applicable rules.
Accurate mileage records should be maintained.
Useful information to record includes:
Date → Destination → Business purpose → Distance travelled
Avoid estimating mileage at the end of the year without appropriate supporting records.
Vehicles can have more complicated tax treatment.
The treatment can depend on:
Purchasing a vehicle may also involve capital allowances rather than simply deducting the full purchase price as an ordinary expense.
Company cars in particular can create benefit-in-kind considerations for directors and employees.
Companies selling physical products commonly incur costs purchasing stock and materials.
Depending on the business, this could include:
The accounting treatment of stock means businesses should keep accurate records of purchases and inventory.
This is especially important for ecommerce, retail, wholesale and manufacturing businesses.
Companies selling products may also incur qualifying costs relating to getting those products to customers.
Potential expenses could include:
Businesses importing or exporting goods may have additional accounting and tax considerations.
Companies frequently pay fees to banks and payment providers.
Depending on the circumstances, qualifying costs could include:
Loan repayments themselves should not simply be treated as ordinary business expenses. Interest and other finance costs can receive different tax treatment.
Certain training expenditure relating to employees or the company's existing business activities may potentially qualify.
Examples might include:
The purpose and nature of the training matter when determining the appropriate tax treatment.
A company may pay subscriptions to relevant professional or industry organisations.
Where the membership is genuinely related to the business and satisfies the applicable requirements, the cost may potentially qualify.
This could include certain:
Keep records showing why the subscription is relevant to the company's activities.
Mobile phone costs can potentially be business expenses, but the treatment depends on how the contract is structured and how the phone is used.
A mobile phone contract taken out directly by the company for business purposes may receive different treatment from a director's personal phone bill.
Where personal and business use are mixed, additional considerations may apply.
Qualifying employer pension contributions made by a company for employees or directors may potentially receive Corporation Tax relief where the relevant conditions are met.
Pension contributions can therefore form part of legitimate company remuneration and tax planning.
However, pension rules, limits and individual circumstances need to be considered.
Substantial contributions should be reviewed carefully and professional advice may be appropriate.
Qualifying repairs and maintenance of business premises, machinery and equipment may potentially be deductible.
However, there is an important distinction between:
Repairing an existing asset
and
Improving, replacing or acquiring a capital asset.
A normal repair may potentially be treated as a revenue expense, while significant improvements may need to be treated as capital expenditure.
Companies often purchase long-term assets such as:
These purchases should not automatically be treated in the same way as everyday running costs.
They may instead qualify for capital allowances.
Capital allowances can allow a company to deduct some or all of qualifying expenditure from profits for tax purposes, subject to the applicable rules.
Understanding the difference between revenue expenses and capital expenses is essential.
Revenue expenses generally relate to the day-to-day running of the business.
Capital expenditure generally relates to acquiring, selling or improving assets that provide a longer-term benefit to the company.
For example:
Monthly accounting software → potentially a revenue expense
Purchasing substantial machinery → potentially capital expenditure
Capital expenditure cannot simply be assumed to be an ordinary Corporation Tax deduction.
However, qualifying expenditure may potentially receive tax relief through capital allowances.
This is an important exception.
Even when entertaining a client has a genuine commercial purpose, business entertaining is generally specifically disallowed as a deduction when calculating taxable profits.
For example, taking a potential client to an expensive dinner to discuss a business relationship does not necessarily mean the cost can be deducted from taxable profits.
There are separate rules concerning employee entertainment and benefits.
Company owners should therefore be particularly careful with entertainment expenditure.
Generally, personal expenditure should not simply be claimed as a company business expense.
Examples could include:
If a company provides something that has personal use for a director or employee, benefit-in-kind or other tax rules may potentially apply.
A limited company is legally separate from its owner.
Keeping company and personal spending separate is therefore extremely important.
A company's Corporation Tax payment does not simply become a deductible expense that reduces the taxable profit on which that same Corporation Tax is calculated.
Corporation Tax should therefore not be treated in the same way as ordinary deductible running costs such as advertising or accounting software.
Qualifying deductible expenses can reduce taxable profits.
For example:
Company revenue: £150,000
Allowable revenue expenses: £90,000
Initial profit: £60,000
Further tax adjustments, allowances and reliefs may then be required before determining the company's final taxable profit.
The relevant Corporation Tax rules are applied to that taxable amount.
This is why accurately recording legitimate expenses is so important.
Companies should maintain accurate records supporting their expenditure.
Depending on the transaction, useful records could include:
Do not rely solely on the fact that a transaction appears on the company bank statement.
A clear invoice or receipt provides much better evidence of what was actually purchased.
Some common mistakes include:
Regular bookkeeping can prevent many of these problems.
Directors do not necessarily need to live in the UK for their UK company to incur legitimate business expenses.
However, overseas directors should still distinguish carefully between:
Company expenditure
and
Personal expenditure.
International travel, overseas offices, foreign suppliers, currency conversion and cross-border activities can also create additional accounting and tax considerations.
Where a UK company operates substantially outside the UK, professional advice may be appropriate.
A UK limited company may potentially deduct qualifying costs incurred in running the business, including certain staff costs, office expenses, professional fees, advertising, software, insurance, premises costs and other legitimate business expenditure.
Qualifying advertising and marketing expenditure incurred for business purposes can generally be relevant when calculating taxable trading profits.
Qualifying accounting and bookkeeping costs associated with running the company can generally be deductible.
A laptop purchased for business use may potentially qualify for tax relief. Depending on the circumstances, it may need to be treated as capital expenditure and relief claimed through the applicable capital allowance rules.
Qualifying business travel may potentially be claimed, but personal travel and ordinary commuting are treated differently.
The treatment depends on the circumstances. Business travel, employee subsistence and client entertainment can have different tax rules, so a meal is not automatically deductible simply because the company paid for it.
Business entertaining of clients is generally not deductible when calculating taxable profits, even where the entertainment has a genuine business purpose.
Personal expenditure should not simply be deducted as a company business expense. Personal use can also create additional tax consequences for directors or employees.
Qualifying deductible expenses can reduce the company's taxable profits and may therefore reduce its Corporation Tax liability.
A UK limited company can potentially claim many of the legitimate costs associated with running its business.
Common areas include:
Staff costs → Office expenses → Premises → Professional fees → Advertising → Software → Insurance → Travel → Stock → Shipping → Business services
However, the key principle is not simply whether the company paid for something.
The important questions are:
What was purchased?
Why was it purchased?
Was it genuinely for the business?
Is it revenue or capital expenditure?
Do any specific tax restrictions apply?
Maintaining accurate records throughout the year makes it easier to identify legitimate deductions, calculate taxable profits correctly and avoid paying more Corporation Tax than necessary.
For unusual expenses, mixed personal and business use, large asset purchases or more complicated transactions, check current HMRC guidance or speak with a qualified accountant or tax adviser.
This article provides general information only and does not constitute tax, accounting, financial or legal advice. UK tax rules and individual circumstances can change. Always check current HMRC guidance or seek professional advice where necessary.
