Business Expenses You Can Claim as a UK based Limited Company

• Reading Time: 7 Minutes
• Published: May 19, 2021
• Last Updated: February 13, 2025

A limited company is one of the most common business structures in the UK. It has various benefits like limited liability, separate legal identity, higher credibility, increased investment opportunities, tax efficiency, and other benefits. Talking about tax benefits, limited companies in the UK currently pay only 19% Corporation Tax on profits; this is quite on the lower side than sole trader structure where one has to pay 20-45% Income Tax on their earnings. Another additional benefit is that you can reduce your tax liability by claiming various business expenses.

Let us talk about these business expenses in detail. However, you must be aware of few rules applicable to claiming business expenses. One most important rule is that you can only claim the costs you incur wholly and exclusively for your business. You could claim for only the part of the expense incurred for business purposes if the payment had a dual purpose, i.e., personal & business. You can claim business expenses that have been paid through your company account or paid by you directly that were reimbursed by the company. You can also claim expenses incurred by your employees on behalf of your company which the company later reimbursed; however, you must keep a proper record of such expenses. The best way to do so is by making a few forms and policies for reimbursement.

What Business Expenses Can Limited Company Claim?

• Start-up costs

Start-up costs are business expenses, and as a limited company, you can claim these expenses. However, it might come as a surprise to many that you can also claim relevant expenses for up to 7 years before the company starts operating.

This cost covers almost all essential expenses like – equipment, computer, software, printing, traveling cost, and similar expenses.

• Professional fee expenses

Starting a limited company is not a child’s play, nor is the cost involve in consulting with professionals. As a first-timer or even an experienced business owner, you might have to consult a professional to help you start with your limited company. These could be your outsourced accounting services, legal services, or any similar professional services.

Whether this cost is incurred in starting up is just a one-time cost or an ongoing cost, you can claim both as your limited company expenses.

• Marketing Expenses

Marketing is a necessary task of your business to sell your products or services. You need to make sure your targeted audience is aware of your products and services. Like the professional fee expenses, marketing expenses, be it a one-off cost or an ongoing -charge, can be claimed as one of your limited company expenses.

• Rental Expenses

You can claim the expense of the rent amount incurred for your business. It is applicable in case you use a part of the property you own for business purpose. The catch, in this case, is that you need to declare the earning from rental in your Self Assessment, and you must have a rental agreement between yourself and your limited company.

• Home Office Expenses

You can make a claim a percentage of your household costs and utility bills as business expenses. These costs might involve – lighting, heating, printing and postage costs and similar expenses as long as they are used solely for business purposes. You can also claim for furniture and other equipment that is used for business purpose.

Working from home in most cases requires utilising the internet, so the broadband cost can be claimed as a business expense. If you have specifically installed new broadband for work, you can claim the installation cost as well as the monthly rental. However, if you already had broadband in place, then you can claim only the monthly rental and that too only on the part used for business purpose. Similar is the case with the phone expenses.

• Equipment Expenses

Equipment necessary for running your business is business expenses, and few examples can be computers, printers, scanners, software, stationery, and office furniture. You can claim these costs as a part of your business expense.

• Bank charges

Expenses like bank fees, overdraft charge, credit card charge, and loan interest charged to your business accounts can be claimed as business expenses. You cannot, however, claim for personal bank charges.

• Professional Subscription Cost

Staying up to date with industry news and update is vital for all business and in some case an essential task as it helps business to keep track about industry trends and your competition. If you have a professional subscription such as magazines, journals or books, you will be able to claim the cost as a business expense.

Additionally, if you pay for any membership, registration, or licence that allows you to operate in your respective profession, these costs can also be claimed. However, they have to be HMRC approved professional bodies

• Business Insurance Cost

Any insurance policy which is strictly for business purpose can be claimed as a business expense.

Few examples of these policies are Public Liability Insurance, Professional Indemnity Insurance or Employer’s Liability.

• Salary & Pension Cost

Salary paid to employee and yourself as a director is a business expense and hence can be claimed. This cost includes the National Insurance Contributions (NIC) cost if the salary crosses the threshold for NIC.

As for pension, once a contract with a pension provider is set up and you start making payments, you will get 100% tax relief as a limited company expense. However, there is a limit of £40,000, after which pension payment becomes taxable.

• Training Expenses

Training your employee and yourself in regular intervals is essential for well being of your company. It helps build on the existing skill and improve your organisation’s productivity. Training is an allowable expense, so you can claim the expense on training. Additionally, if you have to provide for travel and accommodation, both these costs can be claimed.

• Travel expenses

If you or your employee has to travel for work (apart from the regular home to office), you can claim the expenses incurred in these travels. These expenses can include fuel cost (if a personal vehicle is used), public transportation cost, parking fees, road toll fees or even vehicle repair and servicing. Not only these, but you also can claim expenses incurred on accommodation and meal in the event of overnight trips.

• Annual Party Expenses

The costs of annual events for your employees’ entertainment can be claimed as a business expense. However, there are few conditions to claiming this expense. The annual event must be open to all staff members and costs less than £150 per person annually.

• Trivial Benefits Costs

You don’t need to pay tax or let HMRC know about trivial benefits you provide to your employees as a gift or benefit for your employee if all of the following rules apply –

• The benefit cost not more than £50
• The benefit is not a reward for their performance or work
• The benefit is not set out in terms of their contract

• The benefit is not cash or a cash voucher

If the above criteria are not met, then you will need to pay tax on the cost incurred on gifts and benefits.

• Eye tests and glasses expense

If you and your employees are exposed to display screen equipment for one hour or more regularly as a part of your work, you can claim eye test expense.

As for glasses or contact lenses, you can claim for the expense incurred if you or your employee is prescribed to use any corrective lenses for display screen work only and not general use.

• Work uniform or protective clothing

If your employees are required to wear a specific uniform, i.e., clothing with your business logo, then the cost of these uniforms can be claimed. Also, protective clothing which is utilised for safety purpose is exempt from tax even if it is not branded with the company logo.

• Charitable Donations

A charitable donation is not a necessary business expense, but if your business has donated or plan to donate, you will pay lesser tax. A donation can be in the form of – money, product or service you provide, employee through secondment, equipment, property or shares in another company.

Now that we have understood about major business expenses you can claim back as a limited company, it is time you start applying for these tax relief in your accounting process. Using these tax relief and claiming business expenses will help you reduce a significant amount of your corporation tax. If you need assistance in your accounting to help you take full advantage of this tax relief, you can even consider hiring an accounting and bookkeeping services provider. We will give a word of advice – stay updated with any change of rules and always maintain an accurate record of all expenses, even the business pre-formation expenses.

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