Business Expenses You Can Claim as a UK Company

Claiming legitimate business expenses is one of the most effective ways to reduce your UK company’s taxable profit and Corporation Tax bill. But many directors overlook key deductions—or claim incorrectly, leading to penalties or rejected returns.

In this article, we explain what business expenses are, which ones are allowable, and how Dragonfly Associates helps clients optimise and document expense claims, subject to agreement.

What Are Business Expenses?

Business expenses are costs your company incurs “wholly and exclusively” for the purpose of running the business. If allowable, these expenses can be deducted from your taxable profits before calculating Corporation Tax.

Properly documenting your expenses is essential. HMRC may request records at any time, so maintaining accurate receipts and categorisation is a legal requirement.

Common Allowable Business Expenses

Here are typical expenses that most UK limited companies can claim:

• Salaries, bonuses, and employer National Insurance
• Staff training and development
• Office rent, utilities, and business rates
• Phone bills and internet (business use portion)
• Marketing, advertising, and website costs
• Business insurance (e.g. public liability, professional indemnity)
• Travel and accommodation (for business trips)
• Accountancy and legal fees
• Bank charges and payment processing fees
• Subscriptions to trade bodies or business software
• Business-related stationery, printing, and postage

Dragonfly Associates helps classify and record these expenses correctly through our bookkeeping and accounting support packages.

What About Home Office Expenses?

If you work from home, your company may be able to reimburse:

• A flat-rate home office allowance (HMRC-approved)
• A proportion of household bills (electricity, heating, internet) based on usage
• Equipment costs (e.g. monitors, chairs), if owned by the company

This must be calculated and justified carefully. We provide home-working expense templates and guidance for directors using part of their home for business.

Director and Employee Expenses

Company directors and staff may also claim expenses for:

• Business travel (excluding ordinary commuting)
• Hotel stays and meals on overnight business trips
• Mileage (at HMRC-approved rates if using a personal vehicle)
• Use of personal phone for business calls

These must be reimbursed through the payroll or recorded via expense reports. We advise on compliant procedures and integrate claims into our payroll services where applicable.

What You Cannot Claim

You may not claim:

• Personal expenses unrelated to the business
• Client entertainment (not allowable for Corporation Tax relief)
• Fines and penalties
• Commuting costs between home and regular place of work
• Capital costs that must be claimed under capital allowances instead

Claiming non-allowable expenses can result in penalties or tax adjustments. We help ensure all submissions meet HMRC standards.

Recordkeeping Requirements

To support any claim, HMRC expects:

• Receipts, invoices, or electronic records for each expense
• Clear explanation of business purpose
• Timely and organised records

Dragonfly Associates offers digital bookkeeping solutions that allow clients to scan and categorise expenses securely—depending on your selected support plan.

Frequently Asked Questions

Can I claim expenses before the company starts trading?

Yes, in some cases. Pre-trading costs can be claimed if they would have been deductible had the company been active. These must be recorded separately.

Do I need a separate business bank account?

Yes. It’s best practice to keep personal and business expenses separate for clarity and compliance.

Can I reimburse myself for expenses?

Yes, provided the expense was wholly for business purposes. We recommend maintaining clear documentation and using an expense claim form.

Claim Smart, Save More

Understanding what expenses your UK company can claim is essential to efficient tax planning. Done properly, it reduces your Corporation Tax liability while keeping your business compliant.

Dragonfly Associates helps clients set up, manage, and optimise expense tracking systems, offering tailored advice and documentation as part of our accounting packages—subject to agreement.

To ensure you’re claiming everything you’re entitled to (and nothing you’re not), contact our team today.