What Can UK Company Directors Legitimately Claim? A Plain English Guide

If you are a director of your own small limited company, you already know that the tax bill is quietly one of the biggest costs the business carries. What most directors do not know is how many perfectly ordinary expenses the rules already allow you to put through the company, and how many of them they are currently missing.

This is not creative accounting. It is not aggressive. It is just the standard list, written out plainly.

The one test that governs almost everything

Before we get to the list, the principle. For a cost to be a legitimate company expense, it needs to be wholly and exclusively for the purposes of the business.

Three quick implications:

• If a cost has a personal use element, it either does not qualify, or you have to apportion it fairly and only claim the business share.
• If a cost is genuinely business, the fact that you also personally benefit is not usually a problem, provided the reason for spending it was business.
• If a cost is speculative or unproven, HMRC can push back. Documentation matters.

Almost every legitimate claim below flows from that one principle. Almost every mistake flows from ignoring it.

1. Use of home as office

If you work from home for the company, even part of the time, the company can pay you toward the cost of doing so. There are two ways to handle it.

The HMRC flat rate. HMRC allow a simplified weekly amount for use of home, currently £6 a week (£312 a year for full-time home working). No receipts, no calculations. Cleanest option for most directors.

A fair share of your actual bills. If your work-from-home use is substantial (a dedicated room, real utility impact, business insurance implications), you can apportion your actual household costs (heating, lighting, broadband, water, insurance, council tax in some cases) and claim the business proportion. More paperwork, sometimes larger claim.

Whichever you choose, put a short board minute in the company records agreeing the method, and stick with it for the year.

2. Mileage for business travel

When you use your own car for a business journey, the company can reimburse you at HMRC’s approved mileage rates without either of you paying tax on the amount.

• 55p per mile for the first 10,000 business miles in a tax year.
• 25p per mile after that.

Business travel means travel that would not have happened but for the business. Commuting from home to a regular workplace does not count. Visits to clients, suppliers, temporary sites, training, business events, all do.

The record you need is simple: date, from, to, reason, miles. A single spreadsheet or a small app is enough. Do it as you go, not at year end.

3. Company mobile phone

This is where a lot of directors quietly leave money on the table. The rules turn on whose name the contract is in.

• If the mobile phone contract is in the company’s name, the entire cost is a company expense with no benefit in kind to you personally, even if you use it for personal calls too. HMRC’s rule is one company mobile per employee.
• If the contract is in your personal name, only the identifiable business call and data charges can be reclaimed. The line rental cannot.

If you are running everything from your personal phone contract, it is worth switching the main contract into the company’s name at your next renewal. Small paperwork, meaningful annual saving.

4. Employer pension contributions

If we had to pick one move that most directors underuse, this is it.

Contributions made by the company directly into your personal pension are usually:

• Deductible against corporation tax as a business expense.
• Not taxed as personal income when they land in the pension, within the annual allowance.

In effect, you move money out of the company and into your own long term savings while reducing your tax bill on both sides at once. Two tax wins in one move.

There are limits. The annual allowance for most people currently sits at £60,000 and includes contributions from all sources. Higher earners have a tapered allowance. Contributions above the allowance can trigger a charge, so this is worth planning rather than winging.

Because it is often the highest value pound a director extracts from the company, it deserves a proper conversation each year, not an afterthought.

5. Professional subscriptions, training and eye tests

The catch-all category that quietly adds up.

• Professional subscriptions to HMRC-approved bodies (there is a specific list) are allowable, including trade bodies, industry associations and professional institutes relevant to your work.
• Training that maintains or updates existing skills is usually allowable. Training to learn an entirely new trade is trickier.
• Eye tests for anyone who regularly uses display screen equipment (that is, most of us) are allowable, and glasses too if they are prescribed specifically for VDU use.
• Software, tools and subscriptions used to do the work.
• Business insurance, from public liability to professional indemnity.

Individually small, collectively meaningful.

Bonus mentions worth knowing about

A handful of others that are less universal but often missed:

Annual staff event

Up to £150 per head all-in per tax year for staff entertainment. If you are the only employee, that is £150 for you. It is a genuine exemption, not a workaround. Keep the invoices.

Trivial benefits

Non-cash gifts to employees of up to £50 each, provided they are not a reward for services and not part of contractual pay. Close company directors are capped at six such gifts a year (£300 annual cap). A useful, low-friction perk.

Christmas gifts to clients

Only tax-deductible in narrow circumstances: the gift has to carry a conspicuous advert for the business, cost under £50, and not be food, drink, tobacco or a voucher. Otherwise, it is entertaining, which is generally disallowed for corporation tax.

Business travel accommodation and subsistence

When you are away from your normal workplace on business, reasonable hotel and meal costs are allowable. Not extravagant, and not for family who happen to come along.

What NOT to try to claim

Just as useful as knowing what qualifies is knowing what does not.

• Personal shopping put through the company card. Even by accident. Reimburse the company promptly if it happens.
• Everyday commuting between home and a permanent workplace.
• Client entertainment for corporation tax purposes. Usually disallowed, though you may still record it in the accounts.
• Fines and penalties of any kind, including parking tickets and HMRC late-filing penalties.
• Political donations.
• Dividends taken from the company. These are a distribution of profit, not an expense.

Record-keeping that saves you

The single biggest reason a legitimate claim goes wrong at year end is not the rules. It is missing paperwork.

Two habits solve almost all of it:

1. A separate business bank account and card, used only for business. Nothing personal, ever.
2. Ten minutes a month on receipts and mileage. A quick log, photos of any paper receipts, categories set in your accounting software as you go. Doing it monthly beats doing it at year end by a huge margin.

If you have not been doing this and want to catch up, we can help you get set up properly through our bookkeeping service, so this stops being an annual scramble and starts being a monthly rhythm.

How much is actually at stake?

The answer depends on you, but the numbers add up faster than most directors expect.

A director claiming the home office flat rate, sensible mileage, a company mobile, and a properly considered pension contribution can easily be looking at thousands of pounds of legitimate deductions a year. At the current corporation tax rate, those deductions turn into a meaningful drop in the year end bill.

Not radical. Not clever. Just the standard list, actually claimed.

Getting it reviewed

If it has been more than a year since anyone properly looked at what you can claim, a short conversation with us is usually worth the time.

Our corporation tax service for small companies includes a review of the directors’ claim list as standard, so if we already prepare your accounts, this is a conversation we should be having at year end anyway.

If not, and you would like a friendly, honest check, book a free 15 minute call. Bring a rough idea of what your company currently claims. We will tell you straight whether there is anything obvious you are missing.

Frequently asked questions

Can I claim for a home office if I only work from home sometimes?

Yes, in proportion. The HMRC flat rate is designed for regular part-time or full-time home working. If you only occasionally work from home, either use the flat rate for the weeks you did, or claim a modest share of bills. What you cannot do is claim as though you work from home full time when you do not.

Can I put my Netflix or Amazon Prime through the company?

Only if there is a genuine, defensible business reason for the subscription, and only for the business portion of the use. For almost all small companies, streaming services are personal spend. If you want a company subscription to a service you also use personally, put it in your own name and treat it as personal.

Can the company pay for my glasses?

Yes, if they are prescribed specifically for use with display screen equipment and you spend a significant portion of your work on a screen. General everyday prescription glasses are personal, even if you wear them at work.

Should I use my personal car or buy a company car?

For most small company directors, using your own car and claiming HMRC’s mileage rates is far more tax efficient than buying a company car. Company cars come with a benefit in kind that is often larger than the tax you would save. It is worth a proper conversation before making that decision either way.

What happens if HMRC challenges my claim?

A well documented claim, made in line with the wholly and exclusively rule, is straightforward to defend. Where things go wrong is usually poor record keeping or a cost that was never really business in the first place. Get the paperwork right, and the risk of a challenge drops to almost nothing.