Limited company expenses — questions answered

What expenses can I claim through my limited company?

What is the wholly and exclusively rule?

HMRC allows expenses that are wholly and exclusively for the purpose of the business. Dual-purpose expenses are generally not allowable unless you can clearly separate and document the business element. For example: a phone used 70% for business — claim 70%. A laptop used exclusively for work — claim 100%. A family holiday with one day of client meetings — not claimable. Keep records of how you calculated any apportionment.

How much can I claim for home office?

What is the mileage rate for 2025/26?

Keep a mileage log with date, destination, purpose, and miles for every business journey. Commuting to a regular place of work does not count.

Can I claim my laptop and equipment?

Yes — computers, laptops, monitors, and IT equipment used for business qualify for the Annual Investment Allowance (AIA), giving 100% first-year tax relief. The full cost is deducted from profits in the year of purchase. On a £1,500 laptop at 19% corporation tax, that's a £285 saving in the year you buy it.

Can I claim training and professional development?

Yes — if the training updates or maintains skills relevant to your current work. A developer claiming a new programming course: allowable. An accountant claiming a finance certification: allowable. Training that qualifies you for a completely different profession: generally not allowable. Professional membership subscriptions directly relevant to your work are also fully deductible.

Can I claim professional insurance?

Yes — PI insurance, public liability insurance, and employers' liability insurance are all fully deductible. This is one reason Autobooks Gold+ at £99+VAT/month makes sense for many contractors. The £10/month upgrade includes £1m PI and PL cover — the average contractor pays £250–£400/year separately, so the bundled version typically pays for itself.

What can I NOT claim?

Do I need receipts for everything?

Yes — keep receipts or invoices for every expense claimed. HMRC can request evidence going back up to 6 years. Digital copies are acceptable. Most accounting software (FreeAgent, Xero, QuickBooks) lets you photograph and attach receipts directly to transactions. For mileage, keep a log not fuel receipts. For home office flat rate (£6/week), no receipt is needed.

Can I claim my mobile phone through my limited company?

Yes — with conditions. If you have a phone used exclusively for business, purchased through the company, you can claim 100% of the cost and contract. If you use a personal phone for both business and personal calls, you can claim only the business proportion — typically 50–70% of the contract cost. The cleanest approach is a dedicated business SIM through the company: 100% allowable, no calculation, no disputes. Keep the contract in the company name. HMRC accepts a reasonable business proportion estimate for dual-use phones — document your calculation and apply it consistently.

Can I claim client gifts and entertainment?

Client gifts are allowable up to £50 per person per year, provided the gift carries a conspicuous advertisement for your business (branded merchandise, for example) and is not food, drink, tobacco, or a voucher exchangeable for those. A branded USB drive or notebook: allowable. A bottle of wine: not allowable. Client entertainment — meals, events, hospitality — is not allowable regardless of how business-related it is. This is one of the most commonly misunderstood rules. A lunch with a client discussing a contract is still entertaining and not deductible. The only exception: staff entertaining up to £150 per head per year, which can include director-only events.

Can I claim a company car?

You can — but for most contractors it is not tax-efficient unless the vehicle is electric. A petrol or diesel company car triggers a Benefit in Kind (BIK) charge based on list price and CO2 emissions, creating a personal tax liability and employer Class 1A NI. For most contractors, claiming mileage at 45p per mile on a personal vehicle is simpler and more tax-efficient. Electric vehicles are the exception — at a 2% BIK rate in 2025/26, an EV through the company can be significantly cheaper than personal ownership. Always model the comparison with your accountant before committing.

Can I claim expenses incurred before my company was incorporated?

Yes — within limits. Pre-incorporation expenses that were incurred wholly and exclusively for the purpose of the business can be claimed against corporation tax, provided they were incurred within seven years before the company's incorporation date. Common pre-incorporation expenses include: accountancy fees for setting up the company, domain name and website costs, initial equipment, and professional memberships. Keep all receipts and document when and why each cost was incurred. Your accountant will include these in the first set of company accounts.

How do I actually record expenses — what does HMRC require?

HMRC requires you to keep records of all business expenses for at least six years from the end of the relevant accounting period. In practice this means: keep receipts or invoices for all expenses, record them in your accounting software (Xero, FreeAgent, QuickBooks) at the time of purchase, and reconcile them against your bank statements at least monthly. For mileage, keep a log showing date, journey, business purpose, and miles travelled — a spreadsheet or mileage app is sufficient. For home office flat rate, no receipts are needed — just record the weekly claim in your accounts. Digital copies of receipts are acceptable — you do not need to keep paper originals.

How much is claiming all my expenses actually worth?