What expenses can I claim for my business?

A tax deduction is an amount you deduct from your gross income so the tax you have to pay is lower. It’s sometimes called a tax write-off. ​​

Tax deductions include business expenses such as phone, internet, rent, electricity and more.​

You are eligible to deduct expenses that are incurred wholly and exclusively for the purposes of the trade, and there are some more specific rules around certain expenses. In this article, we look at the tax deductions and rules for limited companies. ​

To claim tax deductions, you have to consider:​

If the expense is related to both work and personal use, the company can pay for the expense but there may be a taxable benefit on which national insurance and income tax will be charged. ​

The nature of your business is also a factor when it comes to tax deductions. For example, a media production company will be able to claim a Netflix subscription as expenses (they are critical for research), but a construction business won’t. ​​

With that broad understanding, we have a comprehensive list of business expenses for tax deductions. ​

If the transaction increases the asset’s value beyond the initial purchase price, it can’t be claimed as an expense. It’s instead considered to be part of the asset and capital allowances will be claimed instead.​

There are special tax deductions available for the purchase of assets, known as capital allowances. ​

You can find more details on capital allowances on HMRC’s webpage. Often, the majority of the assets you buy for use in your business will be eligible for 100% relief in the year of purchase through the annual investment allowance (the AIA limit is currently £1 million per annum). ​

If you intend to purchase a lot of fixed assets it’s worth getting an accountant, who can ensure you’re claiming the correct, and maximum, capital allowances available. ​

If you run your limited company from home, you may be able to claim a tax deduction for some of the associated costs. There are three main ways to do this:​

The simplest option is for you as the company director (not the company itself) to claim HMRC’s fixed allowance for home working, currently £6 per week (£312 per year). This method does not require receipts or calculations and is a hassle-free way to cover basic additional costs, such as heating and electricity. The company director would claim this from the company, and the company can recognise this cost as a tax deduction.​

Your company can reimburse you for additional household costs incurred solely due to working from home. However, you cannot claim for fixed costs such as rent, mortgage payments, or council tax - only the extra costs directly linked to income-generating business activities.​

Allowable expenses might include:​

To claim this, you must keep records of your expenses and show they are directly attributable to your business. If no extra costs arise from working at home, you cannot claim anything under this method.​

Your company can pay you rent for using part of your home as an office, which allows the company to claim a tax deduction. However, there are key considerations:​

Each option has pros and cons, and the best approach depends on your specific circumstances. If in doubt, seek professional guidance to ensure compliance with HMRC rules.​

If you use a vehicle for business, how you claim expenses depends on whether the vehicle is owned by the company or owned personally and used for business travel.​

If your limited company owns the vehicle, it can claim tax relief on costs such as fuel, servicing, MOT, road tax, and insurance. However, if the car is available for personal use, it will be deemed to be a benefit in kind which will have income tax and national insurance implications. This often makes company cars less tax-efficient unless they are low-emission or electric vehicles, which have lower BIK rates, or unless they aren’t also available for personal use.​

If you own the vehicle personally but use it for business travel, your company can reimburse you tax-free using HMRC’s mileage rates:​

These rates cover all running costs, meaning you cannot claim additional fuel, servicing, or insurance expenses. Personal travel, including commuting, is not claimable.​

Instead of providing a company car, your company can pay employees (including directors) a car allowance. This is treated as taxable income and subject to PAYE and National Insurance, but gives the employee flexibility in choosing and maintaining their vehicle.​

Because adjustments and reimbursements can be difficult to calculate, this is one of the times you consult an accountant.​

Read more: What motor vehicle expenses can I claim for my business?​

If you’ve personally paid for business expenses (such as travel, online purchases, or costs from the early days of your business), you can be reimbursed by your company. Simply keep a record of these expenses and submit them to your accountant. This includes pre-incorporation expenses like registration fees or initial stock purchases, which can be reimbursed once the company is set up, provided they were wholly and exclusively for the business.​

Be sure to retain invoices and receipts. While they may not be required for your financial statements, HMRC requires you to keep them for at least six years in case of an inspection.​

Many people believe some of the expenses below are business-related. But in reality, they aren’t!​

There are also a few business expenses that can’t be claimed for VAT or tax deductions. Fines and penalties for breaking the law, such as parking fines, late filing penalties, or regulatory fines, are not tax-deductible.​

You can claim any business expense that’s linked to the production of your business income.​

Because HMRC could ask for proof that your trip was for business purposes, you must keep a record of the following and provide it to your accountant:​

 As with any business expense, you should retain copies of invoices or tickets.​

If a trip is part business, part pleasure, you simply need to claim the relevant percentage or direct costs of the business part of the trip. For example, if your Fiji trip included a week on the beach and a week of client meetings in Suva, you can claim all of the Suva expenses and half of the travel costs (like the airfare).​

To claim tax deductions, you must keep records of the expenses for six years after the end of the accounting period they relate to. It's also essential to use the correct method to calculate and reconcile your claims, and ensure you file and pay HMRC on time.​

Understanding what’s tax-deductible and following the relevant rules can help reduce your taxable income or profits. Tracking these expenses accurately is key to ensuring you claim everything you're entitled to.​

While you can use tools like Excel or a manual logbook, this can be time-consuming and prone to errors. Using accounting software like Xero can streamline the process, making it easier to track expenses, manage tax obligations, and automate your filing with HMRC.​

Beany are accountants for ambitious businesses. Delivering big firm expertise without the big cost, we take care of all annual work including financial statements and tax returns, along with day-to-day bookkeeping. And we love to work on more complex concerns such as strategic forecasting, financial insights, buying or selling a business and all things accounting related. With Beany, we help people make smarter decisions for their business and lifestyle through our responsive, friendly expertise.​