Limited Company Expenses

Limited companies can claim tax relief on certain expenses associated with running the business.

These expense claims must be for expenses that are, according to HMRC, “wholly, exclusively and necessarily incurred in the performance of your duties.” That is to say, they must be expenses associated that are solely for your business, not a blend of both personal and business use, for example. Correct bookkeeping and retaining paperwork/invoices/receipts associated with limited company expenses is important to demonstrate that they are legitimate.

What are allowable limited company expenses?

There are number of expenses you can claim, including:

• Salaries
• National insurance contributions (NICs) payable on employee salaries
• Workplace pension contributions
• Cost of company formation and annual return fee
• Insurance (e.g. professional indemnity insurance)
• The costs of travel, accommodation and subsistence while conducting business away from your place of work
• Costs of parking (and a mileage allowance if using your own vehicle as opposed to a company car)
• Fees associated with training courses, coaching and tuition
• Cost of telephone and broadband
• Cost of computers and printers
• The cost of business calls made on a residential phone bill
• Costs associated with stationary and postage
• Home office costs – these can either be a flat fee of £4/week without receipts, or a portion of the household bills
• Business-related software
• Marketing and advertising spends
• Bank charges and merchant fees
• Costs of an accountant or solicitor
• Charitable donations
• Professional subscriptions and membership fees
• Subject to certain conditions, the costs of an annual Christmas party for employees and partners can be deemed a legitimate expense

In order to justify the expenses claimed in the event they are queried by HMRC, it’s important to retain receipts and proof of purchase in case you are asked to provide these.

If you are unsure about whether or not a cost can be deemed an expense, working alongside an accountant will be able to help you determine what is classifiable under limited company expenses.