For limited companies in the UK, understanding which expenses are allowable against your corporation tax bill is crucial. Claiming all eligible costs correctly can reduce your taxable profits, saving you money and keeping your accounts compliant with HMRC regulations. In fact, according to HMRC, businesses could save hundreds or even thousands of pounds annually by maximising their allowable expenses.
| Expense Type | Typical Allowable Amount | Relevant 2026/26 Thresholds | Notes |
|---|---|---|---|
| Office costs | Variable | Up to actual costs incurred | Includes rent, utilities, office supplies |
| Travel expenses | Variable | Based on HMRC mileage rates (45p first 10,000 miles) | Excludes commuting |
| Staff salaries | Variable | Up to actual salary paid | Includes PAYE, NICs, pensions |
| Professional fees | Variable | Up to actual costs incurred | Accountants, solicitors fees |
| Equipment & machinery | Variable | Annual Investment Allowance up to £1 million | Capital allowances apply |
Office Expenses
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Use Free Tax Calculator →Office expenses comprise a broad category of costs that your limited company can claim if they are wholly and exclusively for the business. This includes rent for commercial premises, utility bills such as electricity and heating, broadband costs, and consumables like stationery or printer ink. If you work from home, you can also claim a proportion of your home running costs based on the space and time used for business.
HMRC provides simplified expenses for home office use, allowing businesses to claim a flat rate based on hours worked at home each month. For example, working 25-50 hours monthly from home qualifies for £10 per month in 2026/26. This method helps avoid complex calculations and ensures your claim is compliant.
Travel and Transport Expenses
Travel expenses are allowable when incurred on business journeys, excluding ordinary commuting between home and your usual workplace. This includes travel to client meetings, supplier visits, or temporary work locations. You can claim mileage allowance payments (MAPs) if you use a personal vehicle for business travel, typically at 45p per mile for the first 10,000 miles and 25p thereafter, in line with HMRC’s Advisory Fuel Rates.
Public transport fares, parking fees, tolls, and accommodation costs incurred during business trips are also allowable. Remember to retain receipts and records to substantiate all claims.
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*T&Cs apply. Affiliate link.Staff Salaries and Benefits
Salaries paid to employees, including directors of the limited company, are allowable expenses. This includes gross pay, employer National Insurance contributions, and pension contributions made under auto-enrolment schemes. Any bonuses or commissions paid to staff also qualify, provided they are properly recorded and paid through PAYE.
Additionally, certain staff benefits such as work-related training courses, uniforms, or travel expenses can be claimed, but personal or non-business-related benefits are excluded. Make sure to check the latest HMRC rules on benefits in kind to avoid costly errors.
National Minimum Wage and Compliance
It’s important that salaries meet or exceed the National Minimum Wage or National Living Wage rates applicable for 2026/26, as underpaying employees can lead to penalties. The current minimum wage rates are available on GOV.UK and should be factored into your payroll costs.
Professional Fees and Subscriptions
Fees paid to accountants, solicitors, consultants, and other professional advisers directly related to your business are allowable expenses. This includes costs for preparing your statutory accounts or corporation tax returns, as well as legal fees for contracts or intellectual property protection.
Subscriptions to professional bodies or trade associations relevant to your business activities can also be claimed. However, HMRC excludes any fees for non-business memberships such as gyms or social clubs. Always keep invoices and proof of payment to support your claims.
Equipment and Capital Allowances
Purchasing equipment and machinery for your business is essential, and the costs can often be offset against your tax bill through capital allowances. For 2026/26, the Annual Investment Allowance (AIA) allows limited companies to deduct the full cost of qualifying items up to £1 million in the year of purchase.
This includes computers, office furniture, manufacturing equipment, and certain vehicles (though cars are subject to special rules). If your expenditure exceeds the AIA limit, you can claim Writing Down Allowances on the remaining value over several years.
- Ensure equipment is used solely for business purposes to claim full allowances.
- Separate capital expenditure from day-to-day running costs in your bookkeeping.
- Consult HMRC’s capital allowances manuals for detailed guidance on specific asset classes.
- Only expenses that are “wholly and exclusively” for business purposes are allowable.
- Common allowable expenses include office costs, travel, staff salaries, professional fees, and equipment.
- Use HMRC’s simplified expenses rules for home office claims and mileage allowances for vehicle use.
- Keep detailed records and receipts to support all expense claims.
- Review capital allowances rules to maximise tax relief on equipment purchases.
- Check GOV.UK regularly for updates to thresholds and allowable expense guidance.
For more on managing your limited company finances effectively, see our Corporation Tax Guide or compare your options in Sole Trader vs Limited Company.
What expenses can a limited company claim for working from home?
A limited company can claim a proportion of home running costs such as electricity, heating, and broadband based on business use. HMRC’s simplified expenses allow a flat rate claim depending on hours worked from home, making it easier to calculate allowable costs.
Are personal travel expenses allowable for my limited company?
No, travel between your home and usual workplace is not allowable. However, business travel such as visiting clients, suppliers, or temporary work sites can be claimed, including mileage allowance payments if using a personal vehicle.
Can my limited company claim the full cost of new computers?
Yes, as long as the computers are used solely for business purposes, the full cost can be claimed under the Annual Investment Allowance up to £1 million in 2026/26. This allows you to deduct the entire cost from your taxable profits in the year of purchase.
Official Sources
* GOV.UK: Set up a business · * HMRC: Income Tax rates · * HMRC: Corporation Tax · * HMRC: VAT registration