Allowable Expenses for UK Directors: The Complete Guide

Two routes: company pays directly, or you pay and reclaim — both reduce CT
Mileage in personal car: 45p/mile (first 10,000), then 25p/mile — no PAYE/NI
Home office flat rate: £6/week (£312/year) — no receipts, no CGT risk
Mobile phone: fully deductible if the contract is in the company's name
Client entertaining: always disallowed regardless of business purpose

How director expenses work

As a director, you have two ways to put business costs through your company:

Company pays directly — business credit card, direct bank payment, or company account. The cost lands in the books automatically.
You pay personally and reclaim — an expense claim submitted to the company. The company reimburses you, and the cost sits as a deductible expense in the company's accounts.

Either way, the result is the same: the expense reduces the company's taxable profit, saving corporation tax at 19–25%. Every £100 of legitimate business expenses saves £19–£26.50 in CT, depending on your profit level.

Technology and equipment

Item	Treatment	Notes
Laptops, computers, monitors	Capital allowance (AIA — 100% in year 1)	Up to £1m per year with no spreading
Keyboards, webcams, headsets	Revenue expense — deduct in full	Low-value peripherals treated as consumables
Software subscriptions (SaaS)	Revenue expense — deduct when paid	Microsoft 365, Adobe, cloud tools
Perpetual software licences	Capital allowance (AIA)	One-off purchase, not ongoing subscription
Mobile phone (company contract)	Fully deductible, no BIK	Contract must be in company name
Mobile phone (personal contract)	Business proportion only	Estimate % and apply consistently

Home office

If you work from home, the company can reimburse you for the cost of using your home as a workplace. Two methods:

Flat rate: £6/week (£312/year) — HMRC's simplified method. No receipts required. Available if you work from home for at least 25 hours per month. Zero CGT risk on your home.
Apportioned actual costs — home running costs (rent/mortgage interest, council tax, utilities, broadband, insurance) divided by total rooms, multiplied by rooms used for business. Can be significantly higher than the flat rate for larger homes.

Use the Home Office calculator to compare both methods for your situation. Most directors with high home costs benefit from the apportioned method, provided the room is not used exclusively for business (which would risk CGT on your home).

Travel and mileage

Mileage in your personal vehicle for qualifying business journeys can be reimbursed by the company at HMRC's approved rates — no income tax, no NI on the payment:

Vehicle	First 10,000 miles	Above 10,000 miles
Car or van	45p per mile	25p per mile
Motorcycle	24p per mile	24p per mile
Bicycle	20p per mile	20p per mile

What counts as business mileage: travel to a temporary workplace (client sites, project locations). What does not: ordinary commuting from home to your regular office. For most home-working directors, any client visit is a temporary workplace — all related mileage is claimable.

Professional development

Training, courses, conferences, technical books, and professional subscriptions directly related to your current trade are fully deductible. HMRC-approved professional body memberships (CIOT, ICAEW, BCS, CIPD, Law Society, etc.) are allowable when membership supports your current business activities.

Conferences that mix business content with social elements are still allowable for the business portion. Keep the conference programme as evidence. The accommodation and travel costs to attend are also deductible.

Insurance

Policy	Deductible?	Notes
Professional indemnity insurance	Yes — fully	Required by most professional clients
Public liability insurance	Yes — fully	Essential for client-site work
Employers' liability insurance	Yes — fully	Legally required if you have employees
Relevant life policy	Yes — if properly structured	Life cover through company — no BIK, CT deductible
Personal income protection	No	Personally arranged and personally taxed
Private medical insurance (PMI)	Company deducts cost, but it is a BIK for you	You pay income tax via P11D; company saves CT

Marketing and business development

Website hosting, domain registration, design fees, LinkedIn ads, Google Ads, business cards, brochures, and promotional materials are all fully deductible. Client gifts are allowable up to £50 per person per year, provided they carry a conspicuous business advertisement and are not food, drink, tobacco, or vouchers.

Accountancy, legal, and professional fees

Fees for preparing company accounts and the CT600, payroll management, Companies House filings, and business legal advice are fully deductible. Personal tax advisory fees (your Self Assessment return) paid by the company should ideally be invoiced separately — they are not company expenses, though in practice many accountants include them in a bundled fee.

What to avoid claiming

Client entertaining: always disallowed — no exceptions, regardless of commercial importance
Ordinary clothing: suits and smart clothes for client meetings are not deductible (dual purpose)
Fines and penalties: not for business purposes in law
Personal costs: anything primarily personal with a business veneer — HMRC will challenge it
Dividends: paid from post-tax profit, not an expense

Worked example: typical director annual expenses

Expense	Annual amount	CT saving at 19%
Home office (flat rate)	£312	£59
Mileage (3,000 miles @ 45p)	£1,350	£257
Software subscriptions	£1,200	£228
Professional indemnity insurance	£600	£114
Accountancy fees	£1,500	£285
Training/conferences	£800	£152
Professional subscription	£300	£57
Total	£6,062	£1,152

Use the calculator

Home Office Calculator Corporation Tax Calculator

Frequently asked questions

Can I claim clothing as a business expense?

Only if the clothing is a uniform, protective clothing, or costume specifically required for your work and not suitable for everyday wear. Smart clothes for client meetings are not deductible — HMRC's position (confirmed by case law) is that such clothing has an inherent personal purpose. Branded workwear with a company logo is generally allowable.

Can I claim a mobile phone through the company?

If the company takes out the phone contract directly (contract in the company's name, company pays the bill), the entire cost is deductible and there is no benefit-in-kind — even with personal use. If the contract is in your personal name, only the business proportion is claimable, and you need to estimate the split consistently.

Do I need receipts for all expenses?

For the HMRC flat rate home office allowance: no receipts required. For mileage claims: a contemporaneous mileage log (date, purpose, start/end, miles). For everything else: keep the original receipt or invoice for 6 years. HMRC can request evidence during an enquiry — expenses without supporting documentation will be disallowed.

Can the company pay for my gym membership?

A gym membership paid by the company creates a taxable benefit-in-kind for you, reportable on a P11D. The company can deduct the cost, but you pay income tax on the benefit. It is only tax-neutral overall — no net saving. Staff-only gym facilities (e.g., on-site equipment) can be structured as an exempt benefit, but this is rarely practical for sole directors.

What about staff entertaining for a sole director?

HMRC's staff entertainment exemption allows up to £150 per head per year — and this applies to you as the sole director/employee. A Christmas dinner at £140 is fully deductible and has no BIK. Spend £160 and the whole £160 becomes a taxable BIK. The £150 is a ceiling, not an allowance.

Important: This guide is for general information only and does not constitute tax or legal advice. Tax rules change — always verify current rates and thresholds with HMRC or a qualified accountant before making decisions.

Related guides

Expenses

Home Office Expenses for Directors: Flat Rate vs Apportioned

Expenses

Mileage Allowance Rates 2026-27

Corporation Tax

Allowable Expenses for Corporation Tax