Limited Company Expenses: A Practical Guide to What You Can Claim

/Published:10th February 2026/inBusiness, Expenses, Limited Company, Running a business
Accounting Wise - what expenses can a limited company claim

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What Expenses Can a Limited Company Claim?

Understanding what expenses a limited company can claim is one of the most effective and entirely legitimate ways to reduce your Corporation Tax bill in the UK. Yet in practice, it remains one of the most misunderstood areas of company accounting.

Many company directors either fail to claim expenses they are fully entitled to, or they accidentally claim costs that HMRC does not allow. Both mistakes can be costly. Underclaiming means paying more tax than necessary, while incorrect claims can increase the risk of enquiries, penalties, or expenses being disallowed during a review.

This guide explains exactly what expenses a UK limited company can claim, how the rules work in real-world scenarios, and the most common mistakes directors make. It is written for 2026 and beyond, reflecting current HMRC expectations, recent compliance changes, and how expenses are treated by accountants in practice.

Throughout the article, we will also highlight practical tips, official guidance, and trusted resources so you can claim expenses confidently, accurately, and with the right supporting records in place.

Why Claiming Expenses Correctly Matters

  • Lower Corporation Tax by deducting allowable business costs from your profits
  • Stay compliant with HMRC rules and reduce enquiry risk
  • Avoid penalties for careless or incorrect claims
  • Improve cash flow by not overpaying tax unnecessarily

If you want to explore HMRC’s own guidance alongside this article, the following resources are particularly useful:

As a general rule, an expense must be wholly and exclusively for business purposes to be allowable. Where personal use is involved, special rules apply and this is one of the most common areas where directors go wrong. We will cover this in detail later in the guide.

Next, we will break down the core principle behind allowable expenses and how HMRC decides whether a cost qualifies or not.

What Is an Allowable Business Expense?

At the heart of every expense claim is a single rule set by HMRC. To be allowable for Corporation Tax purposes, an expense must be incurred wholly and exclusively for business purposes.

This principle is the foundation of all UK company expense rules, regardless of the type of cost, how often it occurs, or how small the amount may seem.

What “Wholly and Exclusively” Means in Practice

For an expense to meet HMRC’s test, the following must apply:

  • The cost exists only because the business operates – If you would not have incurred the expense without running the company, it is more likely to be allowable.
  • The expense is not personal in nature – Personal living costs, even if they help you work more comfortably, are not allowable business expenses.
  • Mixed-use costs must be apportioned – Where an expense has both business and personal use, only the business-related portion can be claimed.

This rule applies to every expense category, including travel, equipment, home office costs, subscriptions, and professional fees. There are no automatic exemptions based on value or frequency.

Common Examples of How the Rule Is Applied

  • A laptop used solely for company work is usually allowable in full
  • A mobile phone used for both business and personal calls must be split on a reasonable basis
  • Everyday clothing is not allowable, even if worn while working, because it is personal in nature

HMRC expands on this principle in its official manuals, which are often used during compliance checks and enquiries:

A key takeaway for directors is that intention matters. If an expense has a personal motive, even alongside a business benefit, HMRC may restrict or disallow it entirely.

Office, Premises and Workspace Expenses

If your limited company operates from rented or owned business premises, most day-to-day property and running costs are usually allowable for Corporation Tax purposes. As long as the premises are used solely for business, these expenses are typically deductible in full.

Under guidance from HMRC, the following office and premises costs are commonly allowable:

  • Office rent or lease payments
  • Business rates
  • Electricity, gas and water
  • Office cleaning and waste collection
  • General maintenance and repairs
  • Security costs such as alarms or monitored systems

These expenses are considered part of the normal cost of operating a business and are usually treated as revenue expenses, meaning they reduce your taxable profits in the accounting period they are incurred.

Important Points to Watch

  • Business-only use is key – If the premises are used exclusively by the company, costs are generally allowable in full.
  • Capital improvements are treated differently – Structural upgrades or major refurbishments may be classed as capital expenditure rather than day-to-day expenses. These are not deducted in the same way and may instead fall under capital allowances.
  • Repairs vs improvements – Repairs that maintain the existing condition of the property are usually allowable. Improvements that enhance or extend the building often are not.

HMRC provides detailed clarification on property-related business costs in its internal manuals:

Good record-keeping is essential. Lease agreements, utility bills, and maintenance invoices should be retained to support your claims if HMRC ever reviews your accounts.

Working From Home as a Director

If you work from home as a company director, your limited company can still claim certain expenses related to using your home as a workspace. This is an area where claims are often misunderstood, and it is also one that HMRC pays close attention to during reviews.

There are two commonly accepted methods for claiming home working expenses through a limited company. The right approach depends on how your home is used and how much administration you are comfortable with.

1. Flat-Rate Home Office Allowance

This is the simplest option and is approved by HMRC. The company pays you a flat-rate amount to cover the additional household costs of working from home.

  • Minimal calculations and record-keeping
  • Low enquiry risk when applied correctly
  • Suitable where home working is modest or irregular

HMRC currently accepts a flat-rate payment without detailed evidence of costs, provided it reflects genuine business use of the home. You can read the official guidance here:

2. Proportion of Actual Household Costs

This method allows you to claim a proportion of your real household expenses, based on:

  • The number of rooms used for business
  • The amount of time those rooms are used for work

Using this approach, your company may be able to claim a reasonable business proportion of:

  • Heating and electricity
  • Broadband and internet
  • Council tax
  • Mortgage interest or rent, limited strictly to the business portion

Key Compliance Considerations

  • Claims must be reasonable – HMRC expects calculations to reflect realistic business use. Aggressive apportionments often attract scrutiny.
  • Consistency matters – Changing methods frequently without justification can raise questions during an enquiry.
  • Over-claiming is a common trigger – Home office expenses are one of the most frequent areas challenged by HMRC.

HMRC’s internal guidance on the use of home as an office provides useful context on how these claims are assessed:

As a practical tip, many directors start with the flat-rate method and move to actual cost apportionment only if home working forms a significant part of their business activity.

Salaries, Wages and Director Costs

A limited company can deduct a wide range of employment-related costs when calculating its Corporation Tax bill. These expenses are considered a core part of running a business and are fully allowable when structured correctly.

Under the rules set out by HMRC, a limited company can usually claim:

  • Director salaries
  • Employee wages
  • Employer’s National Insurance contributions
  • Workplace pension contributions
  • Bonuses and commission payments

Director Salaries

Salaries paid to directors are allowable business expenses and reduce the company’s taxable profits. The salary must be:

  • Actually paid through payroll
  • Reported via PAYE and Real Time Information
  • Reasonable for the work performed

In most owner-managed companies, directors use a combination of salary and dividends for tax efficiency. The salary element qualifies as an expense, while dividends do not.

Employer’s National Insurance and Pensions

Employer’s National Insurance contributions are fully allowable and often overlooked when directors think about deductible costs. The same applies to employer pension contributions made into a qualifying workplace pension scheme.

In many cases, employer pension contributions are one of the most tax-efficient ways to extract profits from a company, as they reduce Corporation Tax and are not treated as personal income for the director.

Official guidance on payroll-related deductions can be found here:

Bonuses and Commissions

Bonuses and commissions paid to directors or employees are allowable expenses, provided they are:

  • Wholly for business purposes
  • Properly documented and approved
  • Processed through payroll with the correct tax and NIC applied

Dividends Are Not Allowable Expenses

It is crucial to understand that dividends are not business expenses. Dividends are paid from profits after Corporation Tax and cannot be deducted when calculating taxable profits.

Confusing salaries with dividends is one of the most common errors made by new directors and can lead to incorrect accounts and unexpected tax bills.

Travel and Subsistence Expenses

Travel and subsistence costs are among the most commonly claimed expenses for limited companies, and also one of the most frequently misunderstood. The key question applied by HMRC is whether the journey was undertaken wholly and exclusively for business purposes.

A useful practical test is this: would the journey have taken place if the business did not exist? If the answer is no, the cost is usually allowable.

Allowable Travel Costs

Your limited company can usually claim the following business-related travel and subsistence expenses:

  • Business mileage using HMRC-approved mileage rates when using a personal vehicle
  • Public transport costs including train, bus, taxi, and air fares for business journeys
  • Hotel accommodation for overnight business trips
  • Meals and subsistence while travelling or staying away from your normal place of work

HMRC’s current mileage rates are published here and should always be used to avoid incorrect claims:

Non-Allowable Travel Costs

Certain travel costs are specifically disallowed, even if some business activity takes place:

  • Normal commuting between home and a permanent workplace
  • Personal travel with no business purpose
  • Travel costs for family members or companions
  • Holidays, even where occasional work is carried out

For example, travelling to your regular office location is considered ordinary commuting and is not an allowable business expense. Likewise, extending a holiday for meetings does not automatically make the full trip claimable.

Subsistence and Meals

Meals can be claimed where they are incurred as part of qualifying business travel. This generally means:

  • You are travelling to a temporary workplace
  • You are required to stay overnight for business reasons
  • The cost is reasonable and not excessive

HMRC’s internal manuals explain how travel and subsistence claims are assessed during reviews:

Keeping clear records is essential. Mileage logs, tickets, invoices, and hotel receipts should all be retained to support your claims.

Vehicles and Company Car Expenses

Vehicle expenses are an area where limited companies must choose the correct method of claiming from the outset. In most cases, a company can claim either mileage for a personal vehicle used for business or the actual running costs of a company-owned vehicle. You cannot mix the two for the same vehicle.

The approach you use will affect not only your Corporation Tax position, but also whether additional personal tax charges apply.

Using a Personal Vehicle for Business

If you use your own car or van for business journeys, your company can reimburse you using HMRC-approved mileage rates. This method is simple and involves minimal administration.

  • Fuel, servicing, insurance, and repairs are all covered by the mileage rate
  • No separate claims for individual running costs
  • Clear mileage records must be kept

HMRC’s current mileage rates can be found here:

Once mileage is claimed for a vehicle, you cannot later switch to claiming actual running costs for that same vehicle.

Company-Owned Vehicles

If the company owns or leases the vehicle, it can usually claim the actual running costs instead of mileage. Allowable vehicle-related expenses may include:

  • Fuel
  • Insurance
  • Servicing and repairs
  • Road tax, where applicable

In addition, the company may be able to claim capital allowances on the cost of purchasing the vehicle, depending on emissions and vehicle type.

Company Cars and Benefit in Kind

Company cars often create a Benefit in Kind tax charge for the director or employee using the vehicle. This is calculated based on:

  • The car’s CO₂ emissions
  • The list price of the vehicle
  • The level of personal use

Low-emission and electric vehicles typically attract much lower Benefit in Kind charges, making them more tax-efficient in many cases.

Official guidance on company cars and taxable benefits is available from HMRC.

A common mistake is claiming mileage for a company-owned car or claiming fuel costs on top of mileage for a personal vehicle. Both can lead to disallowed expenses and unexpected tax charges.

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Professional Fees and Subscriptions

Professional fees and subscriptions are generally among the most straightforward and lowest-risk expenses for a limited company to claim. Provided they are incurred wholly and exclusively for business purposes, they are fully allowable and deductible for Corporation Tax.

Guidance from HMRC treats these costs as essential to the administration, compliance, and operation of a company.

Allowable Professional Fees

A limited company can usually claim the following professional and advisory costs:

  • Accountancy and year-end accounts preparation fees
  • Bookkeeping services
  • Tax advice and tax compliance support
  • Legal advice related to the business
  • Company formation and incorporation costs
  • Payroll processing and PAYE support

These expenses are treated as revenue costs and reduce taxable profits in the period they are incurred.

Software and Digital Tools

Accounting and business software is also an allowable expense where it is used for company activities. Common examples include:

Most subscription-based software is deducted as an ongoing business expense, while larger one-off purchases may fall under capital allowances.

Professional Subscriptions and Memberships

Subscriptions to professional bodies are allowable where they are directly related to the role of the director or employee within the company.

  • The membership must support the individual’s work duties
  • The organisation should be recognised or relevant to the profession
  • Personal or hobby-related memberships are not allowable

HMRC maintains a list of approved professional organisations for which subscriptions are usually allowable:

A common mistake is claiming subscriptions that are only loosely connected to business activities. If the link to the role cannot be clearly demonstrated, HMRC may disallow the expense.

Marketing, Advertising and Sales Costs

Marketing and advertising costs are generally fully allowable for limited companies, as they are incurred wholly and exclusively to promote the business, generate sales, or build brand awareness. When correctly documented, these expenses reduce taxable profits and are rarely challenged by HMRC.

Allowable Marketing and Advertising Expenses

A limited company can usually claim a wide range of marketing and sales-related costs, including:

  • Website design and development
  • Website hosting and domain name registration
  • Search engine optimisation (SEO) services
  • Online advertising such as Google Ads and social media advertising
  • Branding, logo creation, and graphic design
  • Printed marketing materials such as brochures, flyers, and business cards

Most ongoing marketing costs are treated as revenue expenses and deducted in the period they are incurred. Larger one-off projects, such as a full website build, may sometimes be reviewed to determine whether they should be treated as capital expenditure, depending on scale and longevity.

Digital Advertising and Online Platforms

Spend on digital platforms is allowable where it is clearly linked to business activity. This includes:

  • Pay-per-click advertising
  • Sponsored social media posts
  • Email marketing platforms
  • Online listing and directory fees

Official guidance on allowable business advertising costs can be found here:

Record-Keeping and Evidence

Invoices, contracts, and receipts should always be retained to support marketing expense claims. This is particularly important for:

  • Ongoing advertising subscriptions
  • Agency or freelancer services
  • Large campaign or rebranding projects

Where marketing costs are paid upfront for long-term services, they may need to be apportioned across accounting periods to reflect the correct timing of the expense.

Technology, Equipment and Software

Technology and equipment costs are essential for most modern limited companies and are generally allowable where they are used wholly and exclusively for business purposes. How these costs are treated for tax depends largely on their value, lifespan, and how they are used.

Guidance from HMRC distinguishes between everyday running costs and longer-term assets that provide value over several years.

Common Allowable Technology and Equipment Costs

A limited company can usually claim for a wide range of business equipment and technology, including:

  • Laptops, desktop computers, monitors, and mobile phones
  • Office furniture such as desks, chairs, and storage units
  • Printers, scanners, and other peripherals
  • Cloud-based software and SaaS subscriptions
  • Cybersecurity services, antivirus software, and data protection tools

Revenue Expenses vs Capital Allowances

Lower-value items and subscription-based software are typically treated as revenue expenses and deducted in full in the accounting period they are incurred.

Higher-value items that are expected to be used over several years may be classed as capital expenditure. Instead of being deducted immediately, these costs are usually relieved through capital allowances.

In many cases, the Annual Investment Allowance allows companies to claim 100% tax relief on qualifying equipment in the year of purchase, subject to the prevailing limits.

Official guidance on capital allowances and qualifying equipment is available here:

Mixed Business and Personal Use

Where equipment is used partly for personal purposes, only the business-related proportion of the cost can be claimed. This commonly applies to:

  • Mobile phones
  • Laptops used outside of work hours

Clear usage policies and consistent apportionment methods help reduce the risk of HMRC challenges.

Training and Education Costs

Training and education expenses are an area where the rules are clear in principle but frequently misunderstood in practice. A limited company can only claim training costs where they are incurred wholly and exclusively for business purposes and relate directly to the individual’s current role.

According to guidance from HMRC, the key distinction is whether the training maintains or improves existing skills, rather than creating a new trade or profession.

When Training Costs Are Allowable

Training costs are usually allowable where they:

  • Improve or update existing skills used in the business
  • Relate directly to the director’s or employee’s current role
  • Are necessary to perform work more effectively or compliantly

Examples of allowable training may include refresher courses, regulatory updates, software training, or role-specific technical development.

When Training Costs Are Not Allowable

Training is generally not allowable where it:

  • Trains the individual for a completely new profession or trade
  • Is primarily personal development rather than business-related
  • Has no clear link to the company’s existing activities

For example, a course that enables a director to enter a new line of work is unlikely to be allowable, even if the company may benefit in the future.

Why This Distinction Matters

This area is closely reviewed by HMRC during enquiries. Claims for education costs that appear to create new skills or qualifications are one of the most common reasons for expenses being disallowed.

HMRC’s internal manuals explain how training and education expenses are assessed:

A practical tip is to ensure training invoices and descriptions clearly reference the existing role or skill being improved. Vague or generic course descriptions can increase the risk of challenge.

Insurance, Compliance and Administration Costs

Insurance, compliance, and administration costs are a fundamental part of running a limited company and are generally fully allowable for Corporation Tax purposes. These expenses are incurred to protect the business, meet legal obligations, and operate within regulatory requirements.

Guidance from HMRC treats these costs as necessary business overheads, provided they relate directly to the company’s activities.

Allowable Insurance Costs

A limited company can usually claim the cost of business-related insurance policies, including:

  • Professional indemnity insurance
  • Public liability insurance
  • Employers’ liability insurance

These policies are often required either by law, by clients, or as part of risk management, making them fully deductible business expenses.

Compliance and Regulatory Fees

Many businesses incur mandatory fees to remain compliant with UK regulations. Allowable compliance-related costs may include:

  • Regulatory and licensing fees
  • Annual compliance or renewal charges
  • Statutory registrations and filings

Data Protection and Administration Costs

Companies that handle personal data are usually required to register with the Information Commissioner’s Office and pay a data protection fee. This cost is an allowable business expense where registration is required.

Official guidance on data protection registration is available here:

Administration costs connected to compliance, governance, and statutory obligations are generally deductible, provided they are incurred wholly for business purposes.

A common mistake is overlooking smaller compliance fees. Individually these may seem minor, but collectively they can make a meaningful difference to taxable profits.

Expenses a Limited Company Cannot Claim

While many business costs are allowable, some expenses are commonly claimed incorrectly and are specifically disallowed for Corporation Tax purposes. These costs do not meet the wholly and exclusively test applied by HMRC and must not be deducted from company profits.

Commonly Disallowed Expenses

The following costs are not allowable business expenses for a limited company:

  • Personal groceries or household shopping
  • Normal commuting costs between home and a permanent workplace
  • Personal clothing, except specialist protective equipment or uniforms
  • Fines and penalties, including parking fines and late filing penalties
  • Dividends paid to shareholders
  • Client entertaining, including meals, drinks, hospitality, and events

Client Entertaining Explained

Client entertaining is one of the most misunderstood areas of company expenses. Even where the cost is entirely business-related, HMRC rules state that client entertaining is not tax deductible.

This includes:

  • Meals or drinks with clients or potential clients
  • Tickets to events, shows, or sporting fixtures
  • Hospitality provided during meetings or negotiations

While these costs may still be paid by the company, they must be added back when calculating taxable profits and do not reduce Corporation Tax.

HMRC’s guidance on entertaining expenses is clear and frequently referenced during enquiries:

Why Getting This Wrong Causes Problems

Incorrectly claiming disallowed expenses can lead to:

  • Increased Corporation Tax after adjustments
  • Interest and penalties
  • Greater scrutiny in future HMRC reviews

A good rule of thumb is this: if a cost has a clear personal benefit or is specifically excluded by HMRC guidance, it should not be treated as an allowable expense.

Record Keeping and Evidence

Accurate record keeping is essential when claiming expenses through a limited company. Even where an expense is clearly allowable, a lack of evidence can result in it being disallowed during a review or enquiry by HMRC.

HMRC expects companies to be able to demonstrate what was spent, why it was spent, and how it relates to the business.

What Records a Limited Company Should Keep

To properly support expense claims, limited companies should retain:

  • Receipts and supplier invoices
  • Business bank and credit card statements
  • Mileage logs showing dates, journeys, and business purpose
  • Clear explanations and calculations for mixed-use expenses

Digital records are acceptable and increasingly encouraged, provided they are clear, complete, and easily retrievable.

How Long Records Must Be Kept

HMRC requires company records, including those relating to expenses, to be kept for at least six years from the end of the accounting period they relate to.

Official guidance on record-keeping obligations is available here:

Why Good Record Keeping Matters

  • Supports accurate Corporation Tax calculations
  • Reduces stress during HMRC reviews or enquiries
  • Helps identify missed or duplicated expenses
  • Provides clarity for accountants and advisers

Poor or inconsistent record keeping is one of the most common reasons expense claims are challenged. In contrast, well-organised records provide both compliance and peace of mind.

Common Mistakes Directors Make

Most expense-related errors made by company directors are the result of misunderstanding rather than deliberate misuse. However, from the perspective of HMRC intent does not remove the requirement to apply the rules correctly. Penalties and adjustments can still apply where claims are inaccurate.

Frequent Expense Claim Errors

The most common mistakes seen in limited company accounts include:

  • Claiming personal expenses through the company
  • Over-claiming home office or working from home costs
  • Treating normal commuting as business travel
  • Failing to claim legitimate business expenses
  • Poor, incomplete, or missing documentation

Why These Mistakes Happen

Expense rules often appear simple on the surface but contain important distinctions that are easy to miss, particularly around mixed-use costs and travel. Directors are also more likely to make errors where:

  • Personal and business finances are not clearly separated
  • Records are updated infrequently
  • Expenses are claimed inconsistently year to year

The Potential Consequences

Incorrect expense claims can lead to:

  • Disallowed deductions and higher Corporation Tax
  • Interest charged on underpaid tax
  • Financial penalties for careless errors
  • Increased likelihood of future HMRC enquiries

HMRC categorises many of these issues as “careless” rather than deliberate, but penalties can still apply if reasonable care has not been taken.

A practical way to reduce risk is to review expense claims regularly and seek advice where the treatment is unclear. Small corrections made early can prevent larger problems later.

Final Thoughts on Expenses and Your Limited Company

Knowing what expenses a limited company can claim is not about pushing boundaries or looking for loopholes. It is about claiming what you are legally entitled to, and doing so correctly and confidently.

When applied properly, the expense rules set out by HMRC allow directors to reduce Corporation Tax, improve cash flow, and run their business more efficiently, without increasing compliance risk.

With good advice, clear records, and sensible judgement, expenses become a practical tax-saving tool rather than a source of stress or uncertainty.

Key Takeaways for Directors

  • Only claim expenses that are wholly and exclusively for business purposes
  • Be realistic and consistent, especially with mixed-use costs
  • Keep clear evidence to support every claim
  • Avoid grey areas unless you have professional advice

If you are ever unsure whether an expense is allowable, it is almost always better to check before claiming rather than correcting mistakes later. Small errors can compound over time, while early clarification keeps your accounts clean and compliant.

For owner-managed companies, working with an accountant who understands both the rules and how HMRC applies them in practice can make a significant difference, not just to your tax bill, but to your peace of mind.

Need help with your accounts as a Limited Company? Contact Accounting Wise Today!

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Limited Company Expenses FAQ

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Yes. If a director pays for a legitimate business expense personally, the company can reimburse the cost and claim it as an allowable expense, provided it meets the wholly and exclusively rule and proper evidence is retained.

No. Personal expenses cannot be claimed by the company. If personal costs are paid from the company account, they are usually treated as a director’s loan or additional income and may create tax liabilities.

No. Dividends are paid from profits after Corporation Tax and are not allowable expenses. They do not reduce the company’s taxable profits.

Yes. A company can claim home working costs either using an HMRC-approved flat-rate allowance or by apportioning actual household costs based on reasonable business use.

No. Client entertaining is not tax deductible, even when it is entirely business-related. These costs must be added back when calculating Corporation Tax.

Normal commuting between home and a permanent workplace is not an allowable expense. Only travel undertaken wholly for business purposes, such as visiting clients or temporary workplaces, can be claimed.

Yes. Receipts, invoices, mileage logs, and bank statements should be kept to support expense claims. Without evidence, HMRC may disallow the expense during a review.

If there is any doubt, it is best to check before claiming. Taking professional advice early is far simpler and safer than correcting mistakes later, especially if HMRC becomes involved.

Glossary of Key Limited Company Expense Terms

Allowable Expense – A business cost that can be deducted from company profits for Corporation Tax purposes, provided it is incurred wholly and exclusively for business use.

Wholly and Exclusively – The core HMRC test for expenses. An expense must be incurred only because of the business and not for personal reasons to be allowable.

Disallowed Expense – A cost that cannot be deducted for tax purposes, such as personal expenses, client entertaining, fines, or dividends.

Mixed-Use Expense – An expense with both business and personal use, such as home working costs or mobile phone bills. Only the business proportion can be claimed.

Revenue Expense – A day-to-day running cost of the business, such as rent, utilities, marketing, or software subscriptions, usually deductible in full in the year incurred.

Capital Expenditure – The cost of buying an asset that will be used over several years, such as equipment or vehicles. These costs are usually relieved through capital allowances rather than deducted immediately.

Capital Allowances – A form of tax relief that allows companies to deduct the cost of qualifying assets over time, or in some cases fully in the year of purchase.

Annual Investment Allowance (AIA) – A capital allowance that allows most businesses to claim 100% tax relief on qualifying equipment up to the annual limit.

Benefit in Kind (BIK) – A taxable benefit provided to a director or employee, such as a company car or private fuel, which may create a personal tax charge.

Business Mileage – Mileage claimed using HMRC-approved rates when a personal vehicle is used for business journeys.

Ordinary Commuting – Travel between home and a permanent workplace. This is not an allowable business expense.

Subsistence – Reasonable food and drink costs incurred while travelling for business or staying overnight away from a normal place of work.

Client Entertaining – Hospitality provided to clients or potential clients, including meals, drinks, and events. These costs are not tax deductible.

Professional Fees – Costs for services such as accountancy, bookkeeping, tax advice, legal advice, and payroll support, which are usually fully allowable.

Payroll Costs – Salaries, wages, employer’s National Insurance contributions, and employer pension contributions paid by the company.

Dividends – Payments made to shareholders from profits after tax. Dividends are not business expenses and cannot be deducted for Corporation Tax.

Supporting Evidence – Records such as invoices, receipts, mileage logs, and bank statements used to justify expense claims.

Record Retention Period – The minimum length of time business records must be kept. HMRC requires most company records to be retained for at least six years.

HMRC – the UK government body responsible for administering taxes and enforcing compliance.
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