Main Categories of Business Expenses

1. Office Costs

Examples:

• Rent for business premises
• Office supplies (e.g., paper, pens, postage)
• Software subscriptions (e.g., Microsoft Office, accounting tools)

Note: If working from home, you can claim a portion of home-related costs (e.g., utility bills) based on usage.

2. Travel and Transportation

Examples:

• Business-related mileage in personal vehicles (claimable at HMRC’s mileage rates)
• Public transport fares
  Accommodation for business trips

Exclusions: Commuting costs between home and your regular place of work are not allowable.

3. Employee Costs

Examples:

• Salaries and wages
• Employer’s National Insurance contributions
• Staff training relevant to the business

Note: Directors’ salaries are included but must comply with PAYE requirements.

4. Marketing and Advertising

Examples:

• Social media advertising
• Website hosting and development
• Promotional materials like flyers and branded merchandise

Condition: Expenses must promote the business directly.

5. Professional Fees

Examples:

• Accountancy and bookkeeping services
• Legal advice related to business matters
• Consultancy fees

Exclusions: Fines, penalties, or fees for illegal activities cannot be claimed.

6. Stock and Materials

Examples:

• Goods purchased for resale
• Raw materials used in production
• Packaging materials

Condition: The stock must be solely for business use.

7. Utilities and Communication

Examples:

• Business phone and broadband
• Water and electricity for business premises

Note: Personal use portions must be excluded if using combined personal-business services.

8. Business Insurance

Examples:

• Public liability insurance
• Professional indemnity insurance
• Employer’s liability insurance

9. Training and Development

Examples:

• Courses that enhance skills relevant to your trade
• Online certifications for industry-specific knowledge

Condition: General training unrelated to the business (e.g., hobby courses) is not allowable.

10. Bank and Financial Costs

Examples:

• Bank charges for business accounts
• Interest on business loans
• Credit card processing fees

Exclusions: Personal bank account fees are not claimable.

11. Equipment and Assets

Examples:

• Laptops and phones used for business purposes
• Machinery and tools
• Furniture for office use

Condition: Significant purchases may be claimed under capital allowances instead of expenses.

12. Travel Expenses

Travel expenses often lead to confusion, so here’s a detailed summary of allowable travel-related costs:

Allowable:

• Flights, train tickets, and taxis for business trips
• Business mileage using your private vehicle, calculated using HMRC-approved mileage rates
• Meals and accommodation during overnight business stays
• Parking fees and tolls during business-related journeys

Non-Allowable:

• Daily commuting between home and a regular place of work
• Personal travel combined with business trips, unless accurately apportioned

13. Work-from-Home Expenses

If you work from home as part of running your Limited Company, you can claim specific expenses related to your home office. Here are the key points:

Simplified Flat Rate Claim:

• HMRC allows a flat rate of £6 per week (£26 per month) without the need for detailed evidence.
• Ideal for small claims with minimal administrative work.

Proportional Claim for Actual Costs:

Claim a portion of home expenses based on the space and time used for business.

Eligible Costs:

• Mortgage interest or rent (a proportion for the business area).
• Utilities (e.g., gas, electricity, water).
• Internet and phone bills (business portion only).
• Council Tax (proportionate to business use).

Calculation Example:
If using 1 room in a 5-room house for business 50% of the time, you can claim 10% of eligible costs (1/5 × 50%).

Office Equipment and Furniture:

Examples: Desks, chairs, filing cabinets, monitors, and printers.
Must be used wholly or predominantly for business purposes. Mixed-use items should be apportioned.

Repairs and Maintenance:

• Repairs specific to the home office space (e.g., painting, fixing an office window) are claimable.
• General household repairs are not, unless the area is also used for business.

Capital Allowances for Home Improvements:

Major renovations for creating or upgrading a home office may qualify under capital allowances.

General Guidelines:

• Expenses must meet HMRC’s wholly and exclusively rule (only business-related costs).
• Keep detailed records, receipts, and calculations for at least six years.
• Be cautious when claiming mortgage interest or significant home improvements, as this could affect Capital Gains Tax if the property is sold.

VAT Considerations:

If VAT-registered, reclaim VAT on home office purchases used exclusively for business (e.g., equipment, furniture).