Limited Company Expenses: What You Can and Cannot Claim in 2026-27
The definitive list of allowable and disallowable expenses for UK limited companies — with HMRC rule references and practical tips for directors.
The golden rule: wholly and exclusively
An expense is deductible for corporation tax if it is incurred 'wholly and exclusively for the purposes of the trade'. This is the bedrock of HMRC's approach to business expenses. Dual-purpose expenses (business and personal) are generally disallowed — but where a specific business portion can be identified and separated, that portion may be allowable.
Technology and equipment (✓ Allowable)
Computers, monitors, keyboards, headsets, webcams, microphones, printers, and specialist equipment used for business. Software licences and subscriptions (Microsoft 365, Adobe Creative Cloud, development tools, security software). Cloud services (AWS, Google Cloud, Azure) used for business purposes. Claim via Annual Investment Allowance for hardware; as revenue expenses for subscriptions.
Communications (✓ Allowable)
Mobile phone contract in the company's name — fully deductible even with some personal use. Broadband — business proportion if mixed use, fully deductible if company-owned and solely for business. Landline business calls.
Home office (✓ Allowable)
Either £6/week flat rate (no receipts needed) or apportioned actual home costs. See the Home Office guide for the full comparison and worked examples.
Business travel (✓ Allowable)
Travel to temporary workplaces (client sites not regularly attended). Mileage at 45p/mile (first 10,000 miles), 25p after. Rail, bus, taxi fares for business journeys. Subsistence (meals) when away from base on business — HMRC sets benchmark rates. Overnight accommodation for business trips.
Professional costs (✓ Allowable)
Accountancy fees, legal fees (for business purposes), professional indemnity insurance, public liability insurance. Professional membership subscriptions (CIPD, BCS, RICS, Law Society, etc.) relevant to current trade.
Training (✓ Allowable)
Training that updates or develops skills in your current trade. Conferences and seminars relevant to your business. Technical books, journals, and publications. Not allowable: training to enter a new trade or acquire skills unrelated to current business.
Client entertainment (✗ Not allowable)
Meals, events, drinks, and hospitality for clients are specifically disallowed by HMRC — even if genuine business discussion takes place. This is one of the most common errors in director expense claims.
Staff entertaining (✓ Allowable up to £150/head)
Annual staff events (Christmas party, summer event) are allowable up to £150 per head per year. The £150 is an exemption threshold — exceed it and the entire amount becomes a taxable benefit-in-kind, not just the excess. For a one-person company, this means up to £150 for the director's own "staff event".
Personal clothing (✗ Not allowable)
Clothing suitable for everyday wear is not deductible — even if you only wear it for work. Protective clothing, uniforms, and costumes required for a specific role are exceptions. Smart business attire does not qualify.
Fines and penalties (✗ Not allowable)
Parking fines, late filing penalties, HMRC surcharges — all disallowed. They are personal liabilities, not business costs, and HMRC would effectively be subsidising its own penalties.
Related calculators
Frequently asked questions
What about a home broadband used for both work and personal use?
Can I claim a gym membership as an expense?
Disclaimer: This article is for general information only and does not constitute tax or legal advice. Tax rules change — verify with HMRC or a qualified accountant before making decisions. Published 6 April 2026 for 2026-27.