Every pound your limited company spends “wholly and exclusively” for the business reduces its corporation tax bill — and every allowable expense you pay personally without reclaiming is money left on the table. Here’s the complete, current list of what a limited company can claim, what it can’t, and the director-specific allowances people miss.

The golden rule: wholly and exclusively

HMRC allows costs incurred wholly and exclusively for the trade. If a purchase helps the company earn its money and there’s no meaningful personal element, it’s usually allowable. Where something has a dual purpose — part business, part personal — it’s generally either disallowed or taxed on you as a benefit in kind. Keep that test in mind and most grey areas resolve themselves.

Director allowances people miss

  • Use of home — £6 a week. A flat allowance for working from home, no receipts or evidence needed; the company reimburses you and claims the cost. Want more? You can instead apportion actual household running costs (electricity, gas, metered water) for business use — but not fixed costs like council tax you’d pay anyway.
  • Mileage — 45p a mile for the first 10,000 business miles each year in your own car, 25p after that, plus 5p a mile per business passenger. Keep a mileage log. Watch the 24-month rule if you travel to the same client site long-term.
  • Trivial benefits — £50 a time. The company can buy you (or staff) small gifts — flowers, a voucher that isn’t exchangeable for cash, a birthday treat — tax-free, as long as each costs £50 or less, isn’t cash, and isn’t a reward for work. Directors of close companies are capped at £300 per tax year.
  • The annual party — £150 a head. One or more annual events (Christmas do, summer barbecue) open to all staff, up to £150 per head per year in total. Go even £1 over and the whole amount becomes taxable, not just the excess.
  • Pension contributions. Employer contributions from the company into your personal pension are usually the single biggest tax-saver available to a director: allowable for corporation tax, no NI, no benefit in kind. The annual allowance is £60,000 (tapered for high earners, broadly from £200,000 of income) — take financial advice before big contributions.
  • A mobile phone. One phone per employee on a company contract is tax-free, even with personal use. A personal contract reimbursed by the company doesn’t get the same treatment — put the contract in the company’s name.

Allowable company expenses: the list

  • Accountancy, legal and professional fees — including your accountant’s monthly fee and professional subscriptions to bodies on HMRC’s approved list.
  • Salaries, employer NI and pension costs — your own director’s salary included, plus subcontractor and freelancer costs.
  • Travel and subsistence — trains, flights, hotels, parking, and reasonable meals when travelling for business or working at a temporary workplace (the 24-month rule applies).
  • Equipment and tools — computers, hardware, tools, materials bought for client work (a cost of sale in your books).
  • Fixed assets — bigger kit with a life of two years or more (machinery, a van). The Annual Investment Allowance gives 100% corporation tax relief up front on up to £1 million a year of qualifying purchases.
  • Software, subscriptions and web hosting — anything the company uses to deliver or market its services, from your IDE to your website.
  • Internet and phone — company-contract broadband and mobiles; home broadband where there’s genuine business use.
  • Advertising, marketing and PR — ads, sponsorships, the lot: costs that grow revenue with no personal element.
  • Insurance — professional indemnity, public liability, employer’s liability, business contents.
  • Training — courses that maintain or update skills used in the company’s existing trade. HMRC’s stance has softened in recent years, but a course teaching an entirely unrelated new trade is still risky ground — ask first.
  • Staff entertaining — allowable when all staff are invited (see the £150 annual events exemption above; beyond that, staff entertaining is still deductible for the company but can create a benefit in kind).
  • Uniforms and protective clothing — safety gear, and branded workwear (the logo removes the dual-purpose problem).
  • Eye tests and VDU glasses — where screen work is part of the job.
  • Bank charges and interest — on the business account and business borrowing.
  • Charitable donations — to registered charities, deductible against corporation tax.
  • Use of home / office costs — the £6 a week above, or rent on a genuine office or co-working space.

What you can’t claim

  • Client and business entertaining — taking clients to lunch is a legitimate business cost to pay through the company, but it gets no corporation tax relief and no VAT recovery.
  • Groceries and everyday meals — eating is a fact of life, not a cost of trade. Subsistence only counts when travelling for business.
  • Everyday clothing — suits and normal business wear are dual-purpose, and so is the dry cleaning that goes with them. (Branded or protective clothing is the exception above.)
  • Gym memberships and personal costs — paid through the company they become a taxable benefit in kind on you.
  • Gifts containing food, drink or tobacco — no relief as customer gifts (the trivial-benefits route for staff is different).
  • Fines and penalties — parking tickets, late-filing penalties: never allowable.
  • Dual-purpose anything — if you can’t honestly say it’s wholly and exclusively for the business, expect HMRC to see a benefit in kind. Company cars are the classic example — vans get friendlier treatment.

Keep the evidence

Every claim needs a receipt or invoice — ideally in the company’s name — and VAT-registered companies need proper VAT invoices to reclaim VAT. Snap receipts into your bookkeeping software as you go (FreeAgent makes this painless) and the year-end takes care of itself. HMRC can ask for records going back six years.

Not sure about a specific cost?

That’s literally what we’re for. Juniper Lynx clients just ask — unlimited advice is part of the service, from £159+VAT a month. See what’s included or get in touch.

Figures correct for the 2026/27 tax year.