Limited Company Expenses Guide: What You Can and Can't Claim (2026/27)

HMRC requires that expenses are incurred wholly and exclusively for business purposes. If an expense has a dual purpose (part business, part personal), it fails the test and cannot be claimed. For example, a laptop used only for client work qualifies. A laptop split between work and personal use does not, unless you can clearly separate the business portion.

No. Client entertainment is not a tax-deductible expense, regardless of how business-related it feels. Taking a client to dinner, buying them tickets to an event, or hosting a client drinks evening cannot be deducted from your Corporation Tax bill. However, you can still pay for it through the company and reclaim VAT in some cases. Staff entertainment (like a Christmas party) is treated differently and can be deductible.

Your company can pay you £6 per week (£26 per month, £312 per year) tax-free as a flat-rate home office allowance with no receipts required. Alternatively, you can claim a proportion of actual household costs (rent, utilities, council tax, broadband) based on the percentage of your home used for business. The actual costs method usually saves more but requires records.

Cars and vans: 45p per mile for the first 10,000 business miles, then 25p per mile after that. Motorcycles: 24p per mile. Bicycles: 20p per mile. These rates have not changed since 2011. If you carry a colleague on a business trip, you can claim an extra 5p per mile. Mileage covers all vehicle running costs, so you cannot also claim fuel, insurance, or servicing separately.

Yes. Software subscriptions used for business purposes are fully deductible. This includes design tools (Adobe Creative Cloud, Figma, Canva), project management (Asana, Monday, Notion), communication (Slack, Zoom, Teams), accounting (Xero, QuickBooks), and any other SaaS products your agency uses. Keep the invoices and make sure the subscription is in the company name.

Yes. Payments to freelancers, contractors, and subcontractors for business work are fully deductible against Corporation Tax. This is usually one of the largest expense categories for agencies. Keep invoices, contracts, and proof of payment. If you are paying a contractor, make sure you have considered IR35 status as this affects how you account for the cost.

A trivial benefit must cost £50 or less per individual benefit. For directors of close companies (five or fewer shareholders), there is an annual cap of £300. The benefit cannot be cash or a cash voucher, must not be a reward for work, and cannot be part of a contractual arrangement. Examples include birthday gifts, occasional meals, or small gift cards.

HMRC requires you to keep business records and receipts for at least six years from the end of the last financial year they relate to. For example, records from the year ending March 2027 must be kept until at least March 2033. Digital copies (scans, photos) are acceptable as long as they are legible and include all the required information.

Only if the clothing is a uniform with your company logo, protective clothing required for the job, or a costume for a specific role. Ordinary business wear (suits, smart shoes, general office clothing) is not deductible, even if you only wear it for work. HMRC considers that ordinary clothing has a dual purpose.

The Annual Investment Allowance (AIA) lets you deduct the full cost of qualifying plant and machinery purchases from your taxable profit, up to £1 million per year. This includes office equipment, computers, furniture, and machinery. If you spend more than £1 million, the excess is claimed through Writing Down Allowances at 14% per year (reduced from 18% in April 2026).

Yes, if the professional body is on the HMRC approved list and the membership is relevant to your business. ACCA, CIMA, ICAEW, and most professional accounting and marketing bodies qualify. Industry memberships like the DMA (Data and Marketing Association) or IPA (Institute of Practitioners in Advertising) are also deductible.

Yes, training that maintains or updates existing skills for your current business is deductible. This includes courses, conferences, workshops, and online learning subscriptions. However, HMRC may challenge training that gives you entirely new skills unrelated to your business. A marketing agency owner doing an advanced Google Ads course is fine. The same owner doing a plumbing qualification would not qualify.