A limited company's expenses are the costs it incurs wholly and exclusively for the trade, and those are deducted before corporation tax is worked, at 19 percent, 25 percent or the marginal rate, per gov.uk. The list is not published by HMRC as a list; it is a test applied to each cost, and the confusion for a new director is usually not whether a cost is allowable but who paid it and how it gets into the company. This page is the limited company expenses list as a director uses it: the ordinary allowable costs, the ones with their own rules, what happens when the director pays from a personal account, the use of home claim, trivial benefits, and the costs that are never allowed however they are paid. The free calculators on this site work the use of home and trivial benefits figures.
Limited company allowable expenses: the ordinary list
Salaries and the employer's National Insurance on them, including the director's; employer pension contributions; premises costs, or the use of home claim; equipment and software, through capital allowances where they are assets; professional fees for the accountant and any legal work for the trade; insurance; travel and subsistence on business journeys away from the normal place of work; phone and broadband on the business proportion; marketing; bank charges and interest on business borrowing; subscriptions to trade bodies. Each is deductible in full where wholly and exclusively for the trade, and on the business proportion where a cost is mixed.
Using personal account for limited company costs
A director who pays a company cost from a personal card has lent the company the money. The cost is still the company's and still allowable, provided the receipt is in the company's name or clearly for the trade, and the company repays the director through the director's loan account, which then shows the company owing the director. That is the right way round; the wrong way is company money paid for personal costs, which creates a loan to the director and the s455 charge at 33.75 percent if it is still owed nine months after the year end, per gov.uk. Dividvo Pro keeps the loan account so both directions are recorded.
Use of home as office limited company claims, and trivial benefits examples
A director working from home can be paid £6 a week by the company without receipts, per gov.uk, or an apportioned share of the household running costs by rooms and business use; the free use of home as office calculator on this site works both. Trivial benefits are gifts from the company costing £50 or less that are not cash, not a reward and not contractual, tax free and unreported, with a £300 a year cap for a director of a close company: a birthday hamper, flowers, a bottle of wine at Christmas, a meal out for the team below £50 a head. A £60 hamper is not a trivial benefit and is taxable in full; a gift card that can be exchanged for cash fails whatever it cost.
What is never allowed
Client entertaining, however business-like, is not deductible for corporation tax and its VAT is not reclaimable, though staff entertaining within the annual limit is. Fines and penalties, including parking fines, are not allowable. Ordinary clothing is not, even if worn only for work; protective clothing and uniforms are. The personal part of any mixed cost is not. Depreciation is not, with capital allowances taken instead. And the director's own dividends are not an expense at all, since they are paid out of the profit after the tax has been worked. A cost on the wrong side of that line is added back in the corporation tax computation, and the free UK corporation tax calculator takes the adjusted profit.
Questions people ask about limited company expenses list
Can the company pay for my lunch?
Only when you are travelling on business away from your normal place of work, as subsistence. Lunch at the office or at home is a personal cost. Where the company pays for it, it is a benefit and reportable, unless it falls within a trivial benefit.
Do I need receipts for every expense?
The company needs records that support each cost for six years, and a receipt is the ordinary record. Small cash costs without one can still be claimed where the record is credible, but a pattern of undocumented claims is what an enquiry looks for. The £6 a week use of home figure is the one claim that needs no receipt.
Is an accountant's fee for my personal tax return allowable?
Not for the company. The company's own accounts and return are allowable; the director's self assessment is the director's cost, and a company that pays it has provided a benefit. Many accountants split the fee for that reason.