Limited Companies & Directors
Can My Limited Company Pay for This? Everyday Expenses Explained
For a normal revenue expense, HMRC’s starting point is that it must have only a business purpose and must not be specifically disallowed. Capital items, benefits, client entertainment, cars and mixed personal/business costs can follow different rules. From 6 April 2026, approved mileage for an employee/director’s own car or van is 55p per mile for the first 10,000 business miles and 25p thereafter.
The simple test is useful, but not enough on its own
For a normal company revenue expense, start with two questions: does it have only a business purpose, and is it specifically disallowed? HMRC describes this as the “wholly and exclusively” principle for business purpose, with separate rules where an expense is capital rather than revenue.
| Expense | Simple starting position | What to watch |
|---|---|---|
| Laptop / computer | Usually business expenditure, often capital rather than a normal revenue expense. | Capital-allowance treatment and any private use. |
| Mobile phone | Company contract can be straightforward where provided for business. | Who owns the contract and whether a benefit-in-kind rule applies. |
| Own car business mileage | Company can reimburse approved business mileage. | From 6 April 2026, cars/vans are 55p for the first 10,000 business miles, then 25p. |
| Working from home | Employer can reimburse qualifying additional household costs. | HMRC guideline is £6 a week / £26 a month under qualifying homeworking arrangements without evidence of the exact additional cost. |
| Client meal | Genuine business cost in the accounts, but business entertaining is normally disallowed for Corporation Tax. | VAT and employee reporting can have separate rules. |
| Staff entertaining | Can be deductible to the company in circumstances where it is genuinely staff entertainment. | Employee benefit exemptions/reporting and annual-function limits need separate consideration. |
| Ordinary clothes | Normally not deductible merely because they are worn for work. | Protective clothing/uniform rules are different. |
Example: director uses their own car
A director drives 8,000 genuine business miles in their own car during 2026/27. At the current approved rate of 55p per mile for the first 10,000 business miles, the simple approved mileage amount is £4,400.
That is different from the company paying all the director’s personal fuel, insurance and car costs without considering benefit rules.
Example: client dinner
The director spends £180 taking a prospective client to dinner and the purpose is genuinely business development. That does not make the £180 Corporation Tax deductible. HMRC specifically disallows business entertainment of clients even where there is a real business purpose.
Some costs are genuine business expenditure but are specifically disallowed in the tax computation.
Example: laptop versus monthly software
A £2,000 laptop expected to be used over several years is normally capital expenditure. A £50 monthly bookkeeping-software subscription is normally a revenue expense. Both may ultimately receive tax relief, but the route and timing can differ.
Working from home
Where a director/employee regularly works from home under qualifying arrangements, the company can reimburse reasonable additional household costs. HMRC’s guideline allows £6 per week or £26 per month without the employer having to justify the exact amount, provided the conditions are met.
What people commonly get wrong
The company bank card does not turn a private cost into a business expense.
Client entertaining is generally specifically disallowed for Corporation Tax.
Equipment and longer-life assets can need capital-allowance treatment.
Keep dates, business purpose, journey and miles. The rate does not replace the need to prove the business journey.
Do not memorise a huge list of “allowable expenses”. For each significant cost, record what was bought, why the business needed it, who used it and whether there was personal use. That evidence usually makes the tax treatment much easier to decide.
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Official sources
Reviewed by
Sandip Vadher, PhD FCCA
Founder of SV&Co Accountancy. Fellow Chartered Certified Accountant with more than 20 years of finance and accountancy experience.
Last reviewed: 16 August 2026