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Allowable expenses for limited company directors 

  • 4 min read
  • Last updated 18 Jul 2024

When you start a company, it’s always important to know what allowable expenses for limited company directors there are. These help you be as tax-efficient as possible and can lower your corporation tax bill.

Claiming expenses as a limited company director differs from self-employed expenses.

Zoom out, then zoom back in

Before we jump into the types of expenses you can claim, there are a few bits of information you need to know to make sure you need to know – rules of play, almost.

Although it might seem repetitive and straightforward, it’s always better to be overinformed than underinformed when it comes to your business and accompanying taxes.

Let’s cover a few key points to keep you on track.

Keep your records up to date

Most expenses can be offset against your corporation tax, but there are a few exceptions (we’ll get to those later). 

The trick to maximising your tax relief (and staying in HMRC’s good books) is keeping your records up-to-date and accurate.

Business vs personal use

Expenses must be for business use, not personal.

Picture this: you’re jetting off to visit a client overseas (hello, Rome!). Maybe you decide to stay an extra day to soak in the sights, visit the Colosseum and enjoy a taste of gelato. 

While the business portion of your trip is classed as an allowable expense, those personal treats unfortunately aren’t. So, enjoy the gelato, but keep it off the expense spreadsheet!

Using your business bank account

Use your business bank account to cover expenses and keep everything in one place. 

But don’t worry if you end up paying out of pocket, you can reclaim these costs later. So, keep those receipts handy!

What are some allowable expenses for limited company directors?

Travel expenses

If travelling is essential for your job, you can claim back certain transport costs. This includes:

  • Parking
  • Hotel rooms (if necessary)
  • Congestion charges
  • Public transport (bus, train, taxi and even air travel)
  • Vehicle insurance
  • Vehicle repairs and servicing

You can also get reimbursed for fuel costs if you pay out of pocket (or travel to a temporary workplace). Here are the rates:

  • Cars and vans: 45p per mile for the first 10,000 miles, 25p for additional miles
  • Motorcyclists: 24p per mile
  • Bikes: 20p per mile

So, keep track of those miles and save those receipts once more! Read more on the Mileage Allowance.

Food and accommodation costs

Another allowable expense for limited company directors is meals and accommodation – from a quick sandwich for lunch to an overnight stay. Again – just remember to keep track of everything so you can expense it later.

Office (and home office) costs

Do you own or rent a physical office space? You can cash in on expenses like rent, utilities and office supplies.

If you work from home, there are a couple of ways to claim:

  • Make use of the flat rate of £6 per week to cover any costs
  • Or calculate the percentage of your home used for business and claim that portion of bills

You can also claim expenses for lighting, heating, postage and printing if they’re used for business purposes.

Equipment and assets

You probably need a computer or laptop, phone and other equipment to help you run your business. Good news: all these can be claimed as expenses for your limited company! 

If there’s any other essential equipment you need, you can go ahead and expense that too.

Get help from an accredited accountant with your company expenses

If this all seems a little complicated, it’s best to get a professional to help you. Luckily, TaxScouts has exactly what you need!

All for a one-off, fixed price. Learn all about the service here.

Professional and advertising fees

Got an accountant crunching numbers, a consultant guiding your strategy or a marketing expert elevating your brand? Professional and advertising fees like this are also an allowable expense for limited company directors. And they can certainly help keep your business on track. 

Training and development

Great news – you can claim costs for courses and seminars that boost your business skills!

Whether it’s career coaching or an industry-specific course, training and development expenses are certainly allowed, so go ahead and sharpen those skills.

Health and eye tests

You can claim back health and eye test expenses if you’re glued to a computer for work. And here’s the cherry on top — prescription glasses for screen time are also a deductible expense. 

Gifts and entertainment (trivial benefits)

This is where things can get a little more complicated.

Gifts and entertainment are often referred to as ‘trivial benefits’.

But what does this mean? There’s no need to stress about taxes (or let HMRC know) if a gift or employee entertainment ticks these boxes:

  • It costs £50 or less
  • It’s not specified in their contract
  • It’s not a reward for their performance or work
  • It’s not cash or a cash voucher

If any gifts or entertainment don’t meet this criteria, make sure to give HMRC a heads-up as you’ll need to pay tax.

How to keep a record of expenses

Let’s talk about the exciting world of expense tracking. Spicy, we know.

It may not be the exhilarating but keeping your records and receipts up to date is super important.

If you love a good spreadsheet (or even if you don’t), back everything up digitally alongside your physical copies. This way, you’ll be prepared for anything and everything, including a surprise visit from HMRC! Not literally, of course…

Get help when it comes to claiming expenses

Limited company expenses can be included in your corporate tax return, and you’ll receive tax relief for allowable expenses.

If your head hurts just thinking about expenses, we can help! Let us sort your expenses, accounts and corporate tax return without the stress.

It’s easy, online and always jargon-free. Learn more here.

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