Claiming Expenses as a Limited Company Director: What HMRC Actually Allows

Claiming expenses is not about being clever or pushing boundaries.

It is about understanding the rules, setting things up correctly, and claiming what HMRC already allows. Yet many limited company directors either underclaim out of caution or overclaim without realising the risk.

Both approaches can cost you money or create problems later on.

Why Directors Often Miss Legitimate Expenses

Many business owners are unsure what they can claim. Some worry about getting it wrong. Others assume certain costs are not allowed and leave them out completely.

Over time, this leads to paying more tax than necessary simply because expenses were never reviewed properly.

Claiming expenses correctly is not aggressive tax planning. It is basic compliance done well.

The Rule HMRC Care About

HMRC focus on one main principle when it comes to expenses.

The cost must be wholly and exclusively for business purposes.

If an expense meets this rule, or has a clear business element that can be apportioned correctly, it is usually allowable.

Understanding this principle removes a lot of confusion.

Common Expenses Limited Company Directors Can Claim

While every business is different, there are several expenses that HMRC commonly allow when set up correctly.

These often include:

• Software and subscriptions used for business

• Professional fees such as accountancy, legal, and consultancy costs

• Business use of home

• Phone and internet costs where there is a business element

• Training that maintains or improves existing skills

• Mileage for business travel using a personal vehicle

• Office supplies and equipment

• Insurance related to the business

The key is making sure these costs are genuine, supported by records, and claimed in the right way.

Mixed Use Expenses Need Care

Some expenses have both personal and business use. These are allowed in part, but not in full.

Examples include:

• Mobile phones

• Home internet

• Use of home

• Vehicles

In these cases, only the business portion should be claimed. Clear reasoning and consistency are important if HMRC ever review your claims.

Why Setup Matters

How expenses are claimed depends on how your company is set up and how transactions are recorded.

Incorrect bookkeeping, missing receipts, or poor explanations can turn perfectly valid expenses into disallowed ones during a review.

This is why setting things up properly from the start matters. Good systems make compliance simple and reduce stress.

Reviewing Expenses Saves Money

Most directors we speak to have never properly reviewed their expense claims.

A simple review often uncovers legitimate costs that have been missed for years. These small amounts add up and can make a real difference to your tax bill over time.

The Bottom Line

Claiming expenses is not about pushing limits. It is about understanding the rules and using them correctly.

If you are unsure what you can or should be claiming, it is worth reviewing your setup sooner rather than later. Leaving money on the table benefits nobody.

If you would like help reviewing your expenses or making sure everything is being claimed correctly and compliantly, get in touch. We are here to help.

Meet Lewis

Lewis is a professional accountant and founder of Rhombus Accounting. He regularly shares his knowledge and best advice here on his blog and on other channels such as LinkedIn.

Book a call today to learn more about what Lewis and Rhombus Accounting can do for you.