Understanding what you can and can’t claim as a business expense is one of the most common questions we get from limited company directors. Here’s a general overview.
What counts as an allowable expense
As a general rule, an expense is allowable for Corporation Tax purposes if it’s incurred wholly and exclusively for the purposes of the business. Common examples include:
- Office costs, including rent, utilities and stationery
- Staff salaries, pensions and benefits
- Business travel and subsistence (within HMRC’s rules)
- Professional fees, including accountancy and legal costs
- Marketing and advertising costs
- Equipment and certain capital purchases, often via capital allowances
What to watch out for
Expenses that are partly for personal use, entertaining clients, and certain travel between home and a regular workplace often have specific rules or restrictions attached. Getting the categorisation right matters both for your Corporation Tax bill and for keeping clean, defensible records.
If you’re ever unsure whether something is an allowable expense, it’s worth checking with us before claiming it — it’s much easier to get this right at the time than to unpick it later.
