Claiming Business Expenses: What You Can (and Can’t) Put Through Your Limited Company

When you’re running a limited company, one of the easiest ways to reduce your tax bill is by making sure you’re claiming all the business expenses you’re entitled to. Every pound of legitimate expenses lowers your taxable profit, which means less corporation tax to pay.

But this is also one of the areas where directors often get caught out. Claiming something that isn’t allowable could raise eyebrows with HMRC, while failing to claim everything you can means you’re effectively leaving money on the table.

In this post, we’ll break down the key rules around business expenses, what you can claim, what you can’t, and how to make sure you stay compliant while maximising your take-home pay.

The Golden Rule: “Wholly and Exclusively”

For an expense to be allowable, HMRC says it must be incurred “wholly and exclusively” for the purpose of running your business.

That means:

• If it’s purely business-related → claim it.

• If it has a dual purpose (part personal, part business) → you may need to apportion it, or it may not be allowable at all.

This is the key principle to keep in mind when deciding whether something is a business expense.

Common Allowable Business Expenses

Here are some of the most common expenses directors can put through their limited company:

• Travel & Mileage – Business travel, train tickets, parking, or mileage claims (45p per mile for the first 10,000 miles).

• Home Office Costs – If you work from home, you can claim a flat rate or a proportion of bills like electricity and internet.

• Equipment & Software – Laptops, phones, software subscriptions, or tools needed to run your business.

• Training & Development – Courses and qualifications that relate directly to your business.

• Professional Fees – Accountancy fees, legal fees, or professional memberships.

• Marketing & Advertising – Website hosting, social media ads, business cards, and promotional materials.

• Pension Contributions – Company contributions are tax-deductible and help build your retirement savings.

Expenses You Can’t Claim

Some things often get mistakenly claimed but aren’t allowable, such as:

• Everyday clothing (unless it’s protective or branded workwear).

• Personal travel or meals not related to business.

• Entertaining clients (some staff entertainment is allowable, but client entertainment isn’t deductible).

• Anything with a clear personal benefit that doesn’t directly support your business activity.

Why Getting This Right Matters

Claiming expenses properly isn’t just about reducing tax – it’s also about protecting yourself. If HMRC were to ever review your accounts, they’ll expect to see accurate records and clear evidence of why expenses were claimed. Getting this wrong could result in additional tax, penalties, or even trigger a deeper investigation.

How an Accountant Can Help

This is where having a specialist accountant makes a big difference. At Numbers Crunch, we’ll:

• Review your expenses to make sure you’re claiming everything you’re entitled to.

• Help you avoid common pitfalls that could raise red flags with HMRC.

• Keep your bookkeeping up to date using FreeAgent (included in all our packages).

• Provide ongoing advice whenever you’re unsure about whether an expense is claimable.

By working with us, you can be confident that you’re maximising your take-home pay while staying fully compliant.

👉 Want to make sure you’re not leaving money on the table? Request a callback today or get an instant online quote.