What expenses can limited company directors claim?

Introduction

Running a limited company often blurs the line between what feels “business-related” and what is actually allowable for tax and accounting purposes. Directors are usually the people making day-to-day decisions, paying for things up front, travelling to meetings, buying equipment, and keeping the company operating smoothly. Naturally, the question comes up: what expenses can limited company directors claim?

The short answer is that directors can claim expenses that are incurred “wholly and exclusively” for the purposes of the business. In practice, that principle has lots of nuance. Some costs are straightforward (like postage for sending customer contracts), while others require careful handling (like using a home broadband connection for both work and personal use). Getting expenses wrong can lead to disallowed deductions, additional tax, unwanted attention during reviews, and awkward conversations with accountants.

This article explains what directors can usually claim, how to treat common expense types, and the record-keeping habits that keep claims defensible. It also covers typical pitfalls, including personal spending disguised as business costs, unclear business purpose, and mixing company and private use.

Understanding the basics: who is “claiming” and how?

Before getting into the list of claimable expenses, it helps to understand what “claiming” means in a limited company context. Directors don’t generally claim expenses in the same way as a sole trader. With a limited company, the business is a separate legal entity. That separation is the whole point of incorporating, and it affects how expenses should be treated.

Directors can usually cover business costs in two ways:

1) The company pays the supplier directly (for example, the company card pays for train tickets to a client site).

2) The director pays personally and is reimbursed by the company (for example, a director buys stationery on their personal card and submits a receipt for reimbursement).

In both cases, the company is the one recording the expense in its accounts. The difference is simply whether the director fronted the money. If the director is reimbursed, the repayment is not typically “income” for the director; it’s the company returning money spent on its behalf, provided the expense is genuinely business-related and properly evidenced.

The “wholly and exclusively” rule in plain language

The guiding principle for business expenses is that the cost must be incurred wholly and exclusively for the purposes of the trade. In practical terms, that means:

- The expense must have a clear business purpose.

- It should not be primarily personal in nature.

- If there is mixed personal and business use, only the business element should be claimed (and you should be able to explain how you calculated it).

Some expenses that feel “sort of businessy” don’t qualify because they are fundamentally personal. Everyday clothing is a classic example: you might wear it to work, but it’s still everyday clothing. Similarly, commuting from home to a permanent workplace is usually treated as personal travel rather than business travel.

When an expense has both business and personal elements, the safe approach is to apportion it. For example, if you use your mobile phone for both company calls and private calls, you’d typically claim only the business proportion. The method should be reasonable and consistent, and the evidence should exist (like itemised bills or a clear policy).

Travel expenses directors can usually claim

Travel is one of the most common categories for director expenses, and also one of the easiest to get wrong. The key is to distinguish business travel from personal travel and commuting.

Business mileage (using a personal vehicle)

If a director uses a personal car or motorcycle for business journeys, the company can reimburse mileage at an approved rate. Mileage claims normally require a log showing the date, start and end points, purpose of the trip, and miles travelled. The log does not have to be fancy, but it must be complete and consistent. A calendar entry or meeting invite can support the business reason.

Business journeys generally include travel to temporary workplaces, client premises, supplier meetings, training events related to the role, or travel between workplaces during the day. They usually do not include ordinary commuting to a permanent workplace.

Public transport, taxis, and ride-hailing

Train tickets, tube fares, bus fares, and reasonable taxi or ride-hailing costs for business travel are typically claimable. Keep the ticket, receipt, or digital confirmation. If you take a taxi late at night after a work event or meeting, documenting the circumstances can help if questions are ever raised.

Parking and tolls

Parking fees and tolls incurred during business travel are usually claimable. Fines, penalties, and parking tickets are a different story: they are generally not allowable as business expenses, even if you were on a work trip, because they arise from breaking rules rather than conducting trade.

Hotels and accommodation

If business travel requires an overnight stay, reasonable accommodation costs are typically claimable. “Reasonable” matters. A standard business hotel is easier to defend than a luxury resort, unless there’s a clear business reason. If you extend a business trip for personal reasons, the personal element should be separated and paid personally rather than by the company.

Meals while travelling

Food and drink purchased while travelling for business can often be claimed, especially where the travel is outside the normal pattern of work and requires being away from your usual base. The expense should be proportionate. Keep receipts and note the business reason (for example, “Lunch during client visit in Manchester”).

Subsistence and everyday lunches

There’s a common misconception that directors can claim their everyday lunch because they were “working”. In most cases, ordinary meals eaten during a normal workday are not considered a business expense. Subsistence is more defensible when it is directly linked to business travel or working at a temporary location away from the normal workplace.

Home office and working-from-home expenses

Many directors work from home some or all of the time. That can create legitimate business expenses, but it also creates a high risk of claiming too much or claiming items that are mainly personal.

Using home as an office: what can be claimed?

If you use part of your home for business, the company can often cover or reimburse a reasonable proportion of household costs that relate to business use. This might include:

- Heating and electricity (incremental usage related to working)

- Broadband and phone (business proportion)

- A portion of rent or mortgage interest, council tax, or home insurance (only in certain structured arrangements and usually approached cautiously)

There are different ways to handle home office costs. A simple, conservative approach is to claim a flat-rate working-from-home amount where available and appropriate. Another method is to calculate a proportion based on the number of rooms used for work and the amount of time used for business. Whatever method is used, consistency and evidence matter.

Be careful with claiming a portion of rent or mortgage costs

Claiming part of rent, mortgage interest, or household bills through the company can have knock-on implications. For example, it can complicate capital gains tax considerations when you sell your home if a room is treated as exclusively used for business. It can also raise questions about whether there is a formal rental arrangement between you and the company. Many directors keep home claims modest to reduce complexity.

Office furniture and equipment for home working

Desks, chairs, monitors, keyboards, printers, and other equipment needed for your director duties can be claimable if the purpose is business. If the equipment is used both personally and for work, you should consider whether it is mainly for business, and document that. Buying a high-end gaming setup and calling it “office equipment” is likely to invite scrutiny.

Technology and communications expenses

Modern businesses run on technology, and directors often pay for tools that make the company function. Many of these costs are clearly business expenses when they are used to run the company.

Computers, laptops, tablets, and accessories

Equipment purchased for business use, such as a laptop for managing operations or a tablet for presentations, is typically claimable. These items may be treated as capital assets rather than simple expenses, meaning they are recorded on the balance sheet and written down over time under the relevant rules. Your accountant can advise on how the company should treat the purchase in the accounts.

Mobile phones and SIM-only contracts

A company phone used for business can generally be paid for by the company. If the director’s mobile phone contract is mixed-use, a common approach is for the company to pay the contract only if it is mainly for business and the arrangement is clear. In other cases, directors claim only the business proportion or have a separate line for company use.

Broadband and internet services

Broadband is frequently mixed personal and business use. Claiming the full cost is usually hard to justify unless it is a dedicated business line. A more defensible approach is to claim a reasonable business proportion, or to have separate business internet where that makes sense.

Software subscriptions and online services

Accounting software, project management tools, CRM platforms, design packages, cloud storage, video conferencing services, and similar subscriptions are typically claimable if they are used for business. Keep invoices and ensure they are in the company name where possible.

Professional fees and services

Limited company directors often rely on professional help. Many of these costs are clearly business-related, and they are common in company accounts.

Accountancy and bookkeeping

Accountant fees, bookkeeping services, payroll services, and fees for preparing annual accounts and company tax returns are typically allowable business expenses. If you pay for advice that is personal rather than business (for example, a personal tax planning service unrelated to company matters), that should be treated separately.

Legal fees

Legal costs can be claimable when they relate to the business, such as drafting commercial contracts, reviewing supplier agreements, dealing with debt recovery, or handling employment matters. Legal fees for personal matters are not business expenses.

Consultancy, freelancers, and contractors

Payments to freelancers and contractors for business services are usually allowable provided they are genuine and properly documented. Keep contracts, invoices, and evidence of delivery. Also ensure you handle tax compliance correctly for the type of service provided.

Insurance for the business

Many types of insurance are normal business costs, such as:

- Professional indemnity insurance

- Public liability insurance

- Employers’ liability insurance (where needed)

- Directors’ and officers’ insurance

- Cyber insurance

Insurance premiums should usually be in the company name, and the coverage should relate to business activities.

Training, courses, and professional development

Training is an area where directors sometimes assume everything is claimable. The key question is whether the training relates to your existing role and helps you perform your duties, rather than preparing you for an entirely new trade.

Claimable training

Courses and training that maintain or improve skills used in the business are typically easier to justify. Examples might include training on new regulations in your industry, software training needed to operate company systems, or CPD required to keep a professional qualification relevant to your director role.

Less claimable training

Training that equips you for a new career path or a new trade may be harder to treat as a business expense. For example, if your company operates as a marketing consultancy and you pay for a course to become a yoga instructor, it will likely be treated as personal rather than business-related.

Memberships and subscriptions

Directors often belong to professional bodies, trade associations, or subscription services that keep them informed and connected. These can be claimable where membership is relevant to the business.

Professional memberships

Membership fees for organisations relevant to your trade may be allowable. The relevance should be clear: it should support business networking, credibility, compliance, or skills maintenance.

Trade journals, newspapers, and publications

Subscriptions to industry journals or publications can be claimable if they are used to inform business decisions. General newspapers are more ambiguous: if you can demonstrate a clear business need (for example, a financial newspaper used as part of an investment research process for a finance business), it can be more defensible than a general-interest subscription with no strong connection.

Marketing, advertising, and sales costs

Expenses that help the company win business are typically claimable, as long as they are not personal in nature.

Website, hosting, domains, and design

Domain registrations, hosting fees, website builds, landing pages, and design work are usually claimable business expenses. Keep supplier invoices and contracts.

Online advertising

Costs for advertising on search engines, social platforms, directories, and display networks are generally allowable. Ensure accounts are in the company name and that invoices are retained. If you’re paying for ads that promote a personal project unrelated to the company, those costs should not be claimed.

Branding, print materials, and promotional items

Business cards, brochures, flyers, signage, and similar marketing materials are normally claimable. Promotional items can also be claimable if they are used to promote the business and are reasonable. Extremely lavish gifts can trigger additional rules, and some gifts are disallowed altogether depending on the circumstances, so treat promotional items with care.

Client entertainment and staff entertainment: know the difference

Entertainment is one of the most misunderstood areas of director expenses. There is a crucial distinction between entertaining clients (or prospective clients) and entertaining staff.

Client entertaining

Taking clients to lunch, buying tickets to events, or paying for hospitality can be a real cost of doing business. However, client entertaining is often not allowed as a tax deduction for corporation tax purposes, even if it is a legitimate business expense in the accounts. That means the company may record the cost, but it may be added back when calculating taxable profits.

Client entertaining still needs receipts, attendee names, and a clear business purpose. Without these, it can look like personal spending.

Staff entertainment (including directors as employees)

Events for staff can sometimes be treated more favourably, especially when they are open to employees and meet relevant conditions. For example, staff social events can be allowable within certain limits and structures. Directors need to ensure the event genuinely qualifies as staff entertainment and isn’t simply entertainment for the director plus a friend.

Office costs and day-to-day running expenses

These are the “bread and butter” costs that keep a company functioning. They are generally straightforward, but still need evidence and a business purpose.

Stationery, postage, and printing

Paper, pens, printer ink, postage, courier services, and printing costs are typically claimable. Keep receipts or invoices, especially where supplies are bought from retail stores.

Office rent and utilities (for business premises)

If the company rents office space, rent and associated utility costs are normal business expenses. This includes electricity, water, heating, and service charges. Again, invoices in the company name make life easier.

Repairs and maintenance

Repairs to company premises, maintenance contracts, and servicing of business equipment are generally allowable. If you’re improving an asset rather than repairing it, the cost may be treated differently in the accounts.

Bank charges and finance costs

Business bank account charges, card merchant fees, payment processing fees, and interest on business borrowing are typically claimable. Personal overdraft interest is not, even if you feel it’s related to cash flow issues caused by the business.

Clothing and appearance: what directors can and can’t claim

Clothing is another area full of assumptions. The general rule is that everyday clothing is not claimable, even if you only wear it for work. A suit, shoes, and a standard dress are all considered ordinary clothing.

Uniforms and protective clothing

Uniforms, branded workwear, and protective clothing required for the role are more likely to be claimable. Examples include high-visibility gear, steel-toe boots required on site, or protective equipment for certain industries. The key is that it must be necessary for the job and not usable as everyday wear in a normal personal context.

Health, wellbeing, and personal costs

Directors sometimes ask whether gym memberships, personal therapy, or general wellbeing costs can be claimed. Even if staying healthy helps you do your job, most of these are considered personal. If the company pays for them, they may become a taxable benefit for the director or employee receiving them.

There are specific workplace health and safety requirements and some employer-provided benefits that can be structured appropriately, but you should not assume “wellbeing” automatically equals “business expense.” The safest approach is to treat personal wellbeing costs as personal unless professional advice confirms a compliant structure for your circumstances.

Using company money: loans, reimbursements, and director’s loan accounts

When directors pay for business expenses personally, reimbursement is typically straightforward: submit the receipt, and the company repays the money. But when directors use company funds for personal spending, even temporarily, the situation can become complicated.

Director’s loan account basics

A director’s loan account is an accounting record of money a director owes the company (or the company owes the director). If you pay personal costs from the company account, this can create a loan from the company to you. Depending on the amounts and timing, this can trigger tax charges, reporting obligations, and additional paperwork.

Directors should avoid casually using company funds as if they were personal funds. Even if you plan to “pay it back next month,” the accounting and tax consequences can be awkward.

Common expense categories and how to treat them

Below are common expense types directors often ask about, with practical guidance on what is usually acceptable and what tends to cause problems.

Meals with clients versus meals alone

Meals with clients can be legitimate business expenses, but they often have restricted tax treatment. Meals alone during a normal workday are usually personal. Meals while travelling for business are more defensible, especially if you are away from your normal base.

Coffee meetings

Buying a coffee for a client meeting can be a modest cost of doing business, but it still counts as entertaining if the purpose is hospitality. Keep the receipt, note who you met, and ensure the context is genuinely business-related.

Gifts

Gifts to clients, prospects, or suppliers can be tricky. Some gifts are allowable in limited situations, but many are disallowed for tax purposes, especially if they are considered entertainment or if they exceed modest thresholds. Gifts to staff can also trigger benefit and payroll considerations. Because gifts have multiple tax angles, it’s wise to have a clear company policy and to log recipient, reason, and value.

Cars, fuel, and company vehicles

Company cars and fuel can create significant tax consequences for directors due to benefit-in-kind rules. If you provide a company car that is available for personal use, that benefit is typically taxable. Fuel paid by the company for personal use can also be taxable.

Some directors avoid company cars and instead claim business mileage for use of their personal vehicle. Others structure vehicle arrangements based on emissions, business need, and remuneration planning. Vehicle costs are an area where getting tailored advice can save money and reduce compliance risk.

Working lunches and subsistence when on-site

If you are travelling to a temporary workplace or attending a training day away from your normal base, subsistence may be claimable. If you are simply buying lunch near your usual place of work, it is typically not. The distinction is crucial and can determine whether the expense is allowable.

Record keeping: what you need to support claims

Even if an expense is clearly business-related, you still need proper records. Good record keeping is not just about satisfying accountants; it protects you if anything is questioned later.

What to keep

- Receipts and invoices (paper or digital)

- Supplier name and date

- Description of what was purchased

- Amount paid and VAT details where relevant

- The business purpose (a short note can be enough)

Best practice: document the “why”

The most common reason expenses get challenged is not that the receipt is missing, but that the business purpose is unclear. For example, “Restaurant bill £180” without any note looks suspicious. Add a note: “Dinner with ABC Ltd to discuss contract renewal.” If staff were present, list them. If it was travel, note where you went and why.

Expense policies help directors too

Many limited companies, even small ones, benefit from a simple written expense policy. It sets expectations, reduces inconsistent claims, and makes it easier to justify decisions later. A good expense policy usually covers:

- What counts as allowable travel

- Meal limits and when subsistence is acceptable

- Rules for client entertaining

- Approaches to home working costs

- Requirements for receipts and notes

VAT considerations (if the company is VAT-registered)

If the company is VAT-registered, expenses also need to be considered from a VAT perspective. Not every receipt supports VAT recovery, and not every expense allows VAT reclaim even if VAT is shown.

To reclaim VAT, you generally need a valid VAT invoice (or acceptable evidence) and the expense must be for business purposes. Some categories, such as certain types of entertaining, have restrictions. Keeping VAT paperwork tidy and ensuring invoices are in the company name can reduce errors and missed claims.

Common mistakes directors make when claiming expenses

Directors are often busy, and expense administration can feel like a nuisance. That’s why the same mistakes show up repeatedly:

Claiming personal spending because it “helps you work”

It may be true that better clothes, a gym membership, or a nicer car improves your confidence and productivity. But that doesn’t make the cost a business expense. If the cost is inherently personal, it’s usually not claimable as a company expense without triggering taxable benefits.

Not apportioning mixed-use bills

Broadband, mobile phones, and even some software can be mixed-use. Claiming 100% without a clear justification can create problems. A reasonable apportionment is often safer and easier to defend.

Confusing commuting with business travel

Commuting is often personal travel. Business travel is typically travel to temporary workplaces or client sites. Directors sometimes assume any travel connected to work is business travel, but the rules are more specific.

Missing receipts and vague descriptions

Missing receipts happen, but repeated missing evidence makes claims look unreliable. Vague descriptions create doubt. The fix is simple: use an app or process to capture receipts immediately and add a short note explaining the purpose.

Using the company account like a personal account

Paying personal expenses from the company account can quickly create a director’s loan situation. Even if repaid, the record keeping can become messy. Keeping finances separate is one of the most important habits for limited company directors.

Practical examples: what a director can often claim

To make this more concrete, here are examples of expenses that are commonly claimable when they have a clear business purpose and are properly evidenced:

- Train tickets to attend a client meeting in another city

- Mileage for driving to a temporary work site

- Hotel stay for an overnight business trip

- Lunch during business travel, recorded with a note

- Laptop purchased primarily for business use

- Accounting software subscription

- Accountant fees for company accounts and corporation tax return

- Professional indemnity insurance premium

- Website hosting and domain renewal

- Business cards and brochures

- Postage and courier fees for sending products or documents

- Training course directly related to improving skills used in the current trade

Examples of expenses that are often not claimable (or need special handling)

And here are examples that directors frequently ask about but that often cause issues:

- Everyday clothing such as suits, dresses, shoes

- Haircuts, grooming, cosmetics

- Regular lunch near your usual workplace

- Gym membership or general wellbeing subscriptions

- Family travel or hotel stays added onto a business trip

- Fines, penalties, and parking tickets

- Personal phone bills claimed in full without apportionment

- Large entertainment costs without attendee details or purpose

- Personal shopping paid via the company account (creating loan issues)

How to set up a simple, defensible expense process

A good expense process doesn’t have to be complicated. For many directors, the best approach is:

- Use a company card for business spending where possible

- If you pay personally, submit expenses monthly with receipts

- Use a receipt-capture app or email receipts to a dedicated inbox

- Add a short business-purpose note to every non-obvious expense

- Keep mileage logs for car claims

- Review expenses regularly and correct any personal items quickly

This routine reduces year-end stress and keeps the company accounts clean. It also helps directors make better decisions about what to claim and what to keep personal.

Final thoughts

Limited company directors can claim a wide range of legitimate business expenses, but the rules are stricter than many people assume. The safest guiding principle is whether the cost is genuinely and primarily for the business, backed by evidence, and recorded clearly. Where personal benefit exists, or where usage is mixed, careful apportionment and good documentation matter.

Travel, subsistence, home working, technology, professional fees, insurance, and marketing are common categories where directors can often claim costs. On the other hand, everyday personal spending, commuting, and poorly documented entertainment are common problem areas. If you build a simple expense process and keep the business purpose clear, you’ll claim what you’re entitled to while reducing the risk of disputes and unexpected tax consequences.

As a director, you are responsible not only for running the company but also for ensuring the company’s records reflect reality. Treat expenses as part of good governance, not a last-minute scramble, and you’ll protect both the company and yourself.