Company Expenses

Allowable business expenses reduce the amount of corporation tax your company has to pay on its profits e.g. if you incur an expense of £100, at the current rate of corporation tax of 20%, your company’s corporation tax decreases by £20 (£100 x 20%).

It is important to understand what business expenses you are legitimately allowed to claim.

Whether an expense can be claimed or not depends on whether the expenses meets HMRC’s criteria for a claimable expense.

Important points to remember:

  • All expenses must always be actually incurred and must not be estimated or rounded.
  • You should keep a record of all your receipts as HMRC can, at any time, request to see proof of these expenses for up to 6 years.
  • If IR35 does not apply to your contract, generally speaking, expenses genuinely incurred ‘wholly & exclusively’ for business purposes will be allowable. If any expenses have a ‘dual purpose’ (i.e. non business or private purpose) then they will generally not be allowable. There are, however, examples where the non-business purpose is merely incidental and the expense will still be allowable.

A few of the most common allowable business expenses are:

  • Business travel
  • Mobile phone
  • Telephone
  • Salaries
  • Employer’s national insurance contributions
  • Employer pension contributions
  • Accommodation – whilst away from home on business
  • Subsistence – whilst working away from home
  • Accountancy fee
  • Postage and stationery
  • Use of home as an office
  • Business computer equipment and software
  • Internet subscription
  • Technical journals and publications
  • Business entertaining
  • Professional subscriptions to approved bodies
  • Bank charges
  • VDU Eye tests/eye wear
  • Work related training
  • Relocation expenses
  • Legal and Professional fees
  • Business Insurance

For a comprehensive guide on business expenses our clients can access this from our industry leading First Freelance Contractor Cloud.

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