What a limited company can claim

Updated 25 October 2026.

A company can deduct costs that are wholly and exclusively for its business. Equipment, vans and cars get capital allowances instead. Here's what usually counts and what doesn't.

Usually allowed

• ✓
  Salaries and wages, including directors' salaries, bonuses and employer NI.
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  Employer pension contributions, paid by the company, including for directors. No NI, and relief against Corporation Tax.
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  Premises: rent, business rates, power, water, insurance, cleaning and repairs.
• ✓
  Working from home: the company can pay an employee or director £6 a week tax-free if they have to work from home, or pay a fair rent for a room under a written agreement.
• ✓
  Business mileage in a director's own car: 45p a mile for the first 10,000 miles, then 25p. Tax-free to you, and an expense for the company.
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  Travel and subsistence on business trips: fares, hotels and meals. Not the normal commute to a permanent workplace.
• ✓
  Phones and IT: one mobile phone contract in the company's name for a director is a tax-free benefit. Software, hosting and broadband.
• ✓
  Professional fees: accountant, legal fees for the business, filing software, and professional subscriptions on HMRC's approved list.
• ✓
  Marketing: advertising, websites, printed materials.
• ✓
  Finance costs: bank charges, loan interest, card fees, bad debts you've written off.
• ✓
  Training that keeps up or improves skills for the current business.
• ✓
  Staff events: an annual party open to all staff, up to £150 a head, is tax-free for staff and allowed for the company.
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  Trivial benefits: gifts up to £50 each that aren't a reward for work. For directors of small companies, capped at £300 a tax year.

Capital allowances, not expenses

• Equipment, tools, computers, furniture and vans: 100% Annual Investment Allowance up to £1 million a year.
• New electric cars (0 g/km CO2): 100% first-year allowance.
• Other cars: 14% a year (18% before 1 April 2026) if CO2 is 50 g/km or less, 6% a year if more.

Depreciation in your accounts is added back for tax: capital allowances replace it.

Not allowed

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  Client entertaining: meals, drinks and events for customers or suppliers, and gifts to them over £50 (or any food, drink or tobacco).
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  Fines and penalties, including parking fines and HMRC penalties.
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  Private costs: anything for you personally. Paying them makes a taxable benefit or a loan to you.
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  Dividends: these come out of profit after tax.
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  Corporation Tax itself, and political donations.
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  Everyday clothing, even if you wear it for work. Uniforms and protective clothing are fine.