21 Allowable Business Expenses Every UK Limited Company Can Claim (2025/26 Guide)

Running a limited company in Derby, Coventry, or anywhere across the Midlands means managing countless expenses. But here's the good news: many of these costs can significantly reduce your Corporation Tax bill – legally and ethically.

The problem?

Most business owners either don't know what they can claim or feel anxious about getting it wrong. That's where we come in. At Accounting Bliss, we help business owners like you gain financial clarity and keep more of what you earn through smart, compliant expense management.

Let's walk through 21 allowable expenses you can claim to lower your tax bill and put more money back into your business.

Quick Summary: What Makes an Expense "Allowable"?

Before we dive into the list, here's the golden rule: an expense must be incurred wholly and exclusively for business purposes. HMRC is clear on this – if there's any personal benefit (what they call "duality of purpose"), you can't claim it.

For example: a laptop used 100% for work? Fully deductible. The same laptop used 50% for Netflix? You can only claim half the cost.

How much can you save? 

For 2025/26, Corporation Tax is 19% on profits up to £50,000 and 25% above £250,000. Every £1,000 you claim in expenses saves you £190-£250 in tax.

Now, let's get into what you can actually claim.

Staff & Employment Costs

1. Salaries and Wages

Every penny you pay yourself as a director's salary, plus wages for any employees, is fully deductible. This is often your biggest allowable expense and a tax-efficient way to extract money from your company.

2. Employer's National Insurance Contributions

Your company's Class 1 employer NICs (currently 15% for 2025/26) on salaries above the threshold are fully claimable.

3. Pension Contributions

Contributing to workplace pension schemes gives you 100% tax relief. You can contribute up to £60,000 annually across all pensions (business and personal) – a powerful way to build wealth while reducing your tax bill.

4. Staff Training and Development

Investing in your team's skills? Training courses, workshops, certifications, and professional development directly related to your business are all deductible. This includes online courses and industry conferences.

5. Recruitment Costs

Job advertising on LinkedIn, Indeed, or local Derby and Coventry publications, recruitment agency fees, and interview expenses all count.

Office & Premises Expenses

6. Office Rent

Renting commercial space in Derby, Coventry, or anywhere in the UK? The full cost is allowable as long as it's used exclusively for business.

7. Home Office Costs

Many Midlands business owners work from home. You can either claim HMRC's flat rate of £6 per week (£312/year) with no receipts needed, or calculate actual costs by working out the percentage of your home used for business and claiming that portion of rent, utilities, council tax, and internet.

8. Business Rates

Council tax or business rates for your commercial premises are fully deductible.

9. Utilities

Electricity, gas, water, and heating for business premises qualify. For home offices, apportion these costs based on business use percentage.

Technology & Equipment

10. Office Equipment

Computers, printers, desks, chairs, filing cabinets, and other office furniture used for business are claimable. For larger purchases, you may need to claim through capital allowances over time.

11. Software and Subscriptions

Cloud accounting software like Xero or QuickBooks, design tools, project management platforms, CRM systems, and industry-specific subscriptions are all allowable. Even your Netflix account qualifies – if it's genuinely used for business research (though be prepared to justify this!).

12. Mobile Phones

If the contract is directly between your company and the phone provider, all costs are deductible with no personal tax charge. However, if your company pays your personal mobile bill, you'll face a benefit-in-kind charge.

13. Internet and Broadband

Business broadband is fully claimable if used exclusively for work. For home workers sharing the connection, apportion costs fairly between business and personal use.

Professional Services

14. Accountancy Fees

Good news! Our fees for managing your company affairs, preparing accounts, and filing tax returns are fully deductible. (Though personal tax return preparation isn't a company expense – that's a personal cost.)

15. Legal and Professional Fees

Solicitor fees for contracts, company formation costs through Companies House, and other professional services directly related to running your business all qualify.

16. Bank Charges and Interest

Business account fees, transaction charges, overdraft interest, and merchant service fees for accepting card payments are all allowable.

17. Business Insurance

Public liability, employers' liability, professional indemnity, contents insurance, and cyber insurance used exclusively for business are claimable. Even relevant life insurance policies taken out through your company can be tax-efficient.

Marketing & Business Development

18. Advertising and Marketing

This is a big one! Website design, hosting, domain renewals, Google Ads, Facebook advertising, printed marketing materials, branded merchandise, business cards, and promotional events are all deductible.

Whether you're promoting your Coventry-based or Derby-based business locally or targeting customers nationwide, these costs reduce your taxable profit.

19. Business Mileage

Using your personal car for business? Claim 45p per mile for the first 10,000 business miles and 25p per mile thereafter.

This covers fuel, insurance, and wear-and-tear. Keep detailed mileage logs showing dates, destinations, and business purposes. Alternatively, if your company owns the vehicle, claim actual running costs.

Cycling to business meetings? You can claim 20p per mile for bicycle mileage too!

20. Travel and Accommodation

Train tickets, flights, hotels, taxis, parking, and meals while traveling for business are deductible – but only for temporary workplaces (assignments lasting under 24 months). If you're traveling to the same client site long-term, HMRC may not allow these claims.

Employee Benefits & Entertainment

21. Annual Staff Events

Your Christmas party or summer BBQ is tax-deductible up to £150 per person, provided it's an annual event open to all staff. This is a great way to reward your team while claiming tax relief.

Bonus: Eye tests for employees who use screens regularly are also claimable – a small cost that shows you care about your team's wellbeing.

What Expenses You Can't Claim

(Avoid These Mistakes!)

Even experienced business owners sometimes get this wrong. Here's what HMRC won't allow:

• Client entertainment – meals, events, or hospitality for clients (though staff entertainment is fine)

• Personal expenses – anything with "dual purpose" or personal benefit

• Fines and penalties – parking tickets, late filing penalties, or speeding fines

• Non-business purchases – that new TV for your home office? Not allowable unless genuinely used for client presentations

The Importance of Record-Keeping

Here's where many Midlands business owners trip up: you must keep receipts and records for at least 6 years. HMRC can challenge your claims anytime during this period.

Our advice? Use cloud accounting software to:

• Photograph receipts instantly on your phone

• Categorise expenses automatically

• Generate reports for tax filing

• Never lose important documentation

At AccountingBliss, we help you set up systems that make this effortless, so you're not scrambling during tax season.

How Can Accounting Bliss Help Derby & Coventry Business Owners?

We know from working with engineering firms, startups, and small businesses across the Midlands that expense management feels overwhelming. You're running a business – you don't have time to memorise HMRC rules or worry about compliance.

That's exactly why we exist.

Here's how we help:

•  Review your expenses to identify overlooked deductions (most clients find they've missed thousands in claims)

• Set up simple systems using leading cloud software so tracking expenses becomes automatic

• Ensure HMRC compliance so you can claim confidently without anxiety

• Conduct regular tax efficiency reviews to maximise what you keep

• Handle all filing deadlines so you never face penalties

Our clients tell us that working with Jay and the team feels like having a financial weight lifted. You gain clarity, confidence, and more importantly – you keep more of what you earn.

Ready to Stop Overpaying Tax?

If you're a Derby or Coventry business owner wondering whether you're claiming everything you're entitled to, let's chat. We offer a free 30-minute consultation to review your situation and show you exactly where you could be saving.

Visit www.accountingbliss.co.uk or call us:

• Derby office: 01332 577 289

• Coventry office: 02475 098 680

Let's build your path to financial freedom together – one smart expense claim at a time.

About the Author: 

This guide was created by the team at AccountingBliss, Derby and Coventry-based accountants specialising in helping small business owners achieve financial clarity and pay less tax legally. We provide professional, approachable accounting services that honour both your ambition and your peace of mind.

Related Services:

• Limited Company Accounting

• Tax Planning & Strategy

• Self-Assessment Tax Returns

• Startup Support & Business Formation