Limited Company Director Expenses: What You Can Claim in 2026/27

Running your business through a limited company gives you one big advantage over taking all your money out first: genuine business costs can be paid by the company before tax. Claimed properly, expenses reduce corporation tax, and some benefits can reach you personally with no income tax or National Insurance at all.

But the rules are tighter than many directors realise, and several changed for 2026/27. This guide covers every common expense, tells you what's allowable and what's taxable, and links to a detailed guide on each one.

Quick answer A limited company can deduct costs incurred wholly and exclusively for the business. Each £1 of allowable expense saves 19p–26.5p of corporation tax. Some costs, like trivial benefits, a company mobile phone, the annual staff party, business mileage and employer pension contributions, can benefit you personally tax-free, while others count as a taxable benefit in kind.

New for 2026/27: mileage rate up to 55p, employee self-claims for working-from-home relief abolished, electric car benefit-in-kind 4%.

Why claiming through your company is worth it

Paying a genuine business cost through the company is far cheaper than paying it personally out of taxed income.

Pre-tax company profit needed to cover a £1,000 cost (2026/27):

How it's paid	Basic-rate director	Higher-rate director
Company pays it as a business expense	£1,000	£1,000
You pay personally from dividends	≈ £1,383	≈ £1,921
Saving by claiming correctly	≈ £383	≈ £921

Assumes 19% corporation tax and 2026/27 dividend rates of 10.75% (basic) and 35.75% (higher), with the dividend allowance already used. Illustrative.

For a higher-rate director, a genuine expense paid through the company needs about half the profit it would take to pay it personally.

The golden rule: "wholly and exclusively"

For a cost to be deductible against corporation tax, it must be incurred wholly and exclusively for the purposes of the trade. In practice:

• Dual-purpose costs (partly personal, partly business) are only deductible if you can identify and separate the business part, such as the business share of a phone bill.
• Personal costs paid by the company aren't "free". They're usually treated as extra salary, a benefit in kind, or a debit to your director's loan account.
• Some costs are specifically disallowed even if they're for the business: client entertaining, most fines and penalties, and depreciation (capital allowances apply instead).

There's a second, separate question: is it taxable on you personally? A cost can be fully deductible for the company and still be a benefit in kind for the director (private medical insurance is the classic example). The table below covers both.

The director expenses master table (2026/27)

Expense	Company gets tax relief?	Taxable on you?	VAT reclaimable?*	In-depth guide
Trivial benefits (≤ £50 each, £300/yr cap)	✅ Yes	❌ No, if rules met	Usually ✅	Trivial benefits
Working from home: £6/week flat rate	✅ Yes	❌ No	❌ No (no VAT)	Working from home
Business mileage in your own car (55p/25p)	✅ Yes	❌ No, up to AMAP rates	Fuel element only (with receipts)	Business mileage
Business travel (train, flights, hotels)	✅ Yes	❌ No	✅ Most UK travel/hotels	Travel & subsistence
Subsistence on business trips	✅ Yes	❌ No, if qualifying	✅ With VAT receipt	Travel & subsistence
Commuting to a permanent workplace	❌ No	✅ Yes, if company pays	—	Business mileage
One mobile phone (contract in company name)	✅ Yes	❌ No	✅ Yes	Phone & broadband
Home broadband	✅ Business share	⚠️ Depends on set-up	✅ Business share	Phone & broadband
Annual staff party (≤ £150/head)	✅ Yes	❌ No, if rules met	✅ Staff portion	Christmas party exemption
Client entertaining	❌ No	❌ No	❌ No (UK clients)	Entertaining & gifts
Business gifts (≤ £50, with logo, not food/drink)	✅ Yes	—	✅ Yes	Entertaining & gifts
Employer pension contributions	✅ Yes	❌ No (within allowances)	—	Pension contributions
Electric company car	✅ 100% FYA if new (to 31/3/27)	✅ BIK at 4%	⚠️ Usually blocked on purchase	Electric company car
Relevant life cover	✅ Usually	❌ No	— (exempt)	Life cover & health insurance
Private medical insurance	✅ Yes	✅ BIK	— (exempt)	Life cover & health insurance
Computer equipment & software	✅ Yes (AIA / full expensing)	❌ No, if mainly business	✅ Yes	See below
Accountancy, legal, professional fees	✅ Yes	❌ No	✅ Yes	See below
Training (related to current business)	✅ Yes	❌ No	✅ If VAT charged	See below
Professional subscriptions (HMRC-approved bodies)	✅ Yes	❌ No	Usually none	See below
Business insurance	✅ Yes	❌ No	— (exempt)	See below
Marketing, website, advertising	✅ Yes	❌ No	✅ Yes	See below
Eye tests (screen users), flu jabs, one health screening a year	✅ Yes	❌ No	—	See below
Gym membership (off-site)	✅ Yes	✅ BIK	⚠️	See below
Everyday clothing	❌ No (unless uniform/protective)	✅ If paid	—	See below
Fines & penalties (parking, HMRC)	❌ No	—	—	See below

\* VAT columns assume your company is VAT-registered on standard accounting and has a valid VAT invoice. Flat Rate Scheme users can't reclaim VAT on most purchases.

The main expense categories

1. Tax-free perks for directors

These are the most valuable expenses for small company directors, because they move value from the company to you with no income tax and no NI.

• Trivial benefits: gifts of £50 or less (including VAT) that aren't cash, aren't a reward for work and aren't contractual. Directors of close companies (most owner-managed companies) are capped at £300 a tax year. Read: Trivial benefits for directors.
• Annual staff party: up to £150 per head per year, including VAT, transport and accommodation, for an event open to all staff. Read: Christmas party & annual event exemption.
• Company mobile phone: one phone per employee, with the contract between the company and the provider. Read: Mobile phone & broadband.
• Health items: eye tests and glasses for screen use, flu jabs and one health screening a year can all be provided tax-free.
• Pension contributions: employer contributions are deductible and not taxed on you within your annual allowance. Read: Employer pension contributions.

2. Working from home

Most small company directors work from home at least part of the time. There are three main ways to claim:

1. Flat rate: the company pays you £6 a week (£26 a month) tax-free with no receipts needed.
2. Actual extra costs: the company reimburses the additional heat, light and similar costs you can evidence.
3. Use-of-home (licence) arrangement: the company pays a fee for using part of your home. This can be more valuable but needs care around rental income, capital gains and business rates.

2026/27 change: since 6 April 2026, employees, including directors, can no longer claim working-from-home relief directly from HMRC. If you want relief, it must come through the company.

Read: Working from home expenses for directors.

3. Travel, mileage and subsistence

• Mileage in your own car: the company can pay 55p per mile for the first 10,000 business miles and 25p after that (2026/27), tax-free. That's up from 45p, the first rise since 2011.
• Public transport, flights, hotels: deductible when the journey is business travel, not commuting.
• Subsistence: meals and incidental costs while travelling to a temporary workplace can be reimbursed tax-free.
• Commuting to a permanent workplace is never allowable.

Read: Business mileage for directors · Travel & subsistence expenses.

4. Company cars

Petrol and diesel company cars usually carry heavy benefit-in-kind charges (often 25%–37% of list price a year). Fully electric cars are taxed at just 4% in 2026/27, rising to 5%, 7% and then 9% by 2029/30. New zero-emission cars bought by 31 March 2027 can qualify for a 100% first-year allowance.

Read: Electric company cars through a limited company.

5. Insurance and protection

• Business insurance (professional indemnity, public liability, employers' liability, cyber): fully deductible.
• Relevant life cover: a company-paid death-in-service policy, usually deductible with no benefit in kind.
• Private medical insurance: deductible, but a taxable benefit for you.
• Executive income protection: usually deductible, with no benefit in kind on the premiums.

Read: Relevant life cover & health insurance.

6. Entertaining and gifts

• Client entertaining (meals, drinks, events, hospitality) is not deductible for corporation tax, and VAT can't be reclaimed for UK clients.
• Staff entertaining is deductible, and the annual party can be tax-free (see above).
• Business gifts are deductible if they cost £50 or less per recipient per year, carry your business branding, and aren't food, drink, tobacco or vouchers.

Read: Client entertaining & business gifts.

7. Equipment, software and running costs

• Computers, phones, desks, chairs, machinery: claimed through capital allowances. The Annual Investment Allowance (£1 million) or full expensing (for companies, on new main-rate plant) usually gives 100% relief in the year of purchase. Equipment provided to you that's mainly for business use isn't a benefit in kind.
• Software and subscriptions (accounting software, Microsoft 365, design tools): deductible.
• Accountancy, legal and professional fees: deductible when for the business, but not for personal matters such as your own tax return. Ask your accountant to separate these.
• Bank charges, stationery, postage, website hosting and domains, marketing and advertising: all deductible.

8. Training and professional subscriptions

• Training is deductible when it maintains or updates skills for your current business. Training for a completely new trade is generally treated as capital and not deductible.
• Professional body subscriptions are deductible, and tax-free for you if the body is on HMRC's approved list (List 3).

9. Paying family members

Salaries to a spouse or children are deductible only if the pay is commercial for the work actually done, and the work must be real and recorded. Over-paying a family member is a common HMRC enquiry point.

A full year, claimed properly: worked example

Amira is the sole director of a consultancy, works from home, and is a higher-rate taxpayer taking dividends. In 2026/27 her company pays for:

Item	Cost to company	Tax on Amira
6 trivial benefits (birthday meal, Christmas gift, etc.)	£300	£0
Working from home at £6/week	£312	£0
4,000 business miles at 55p	£2,200	£0
Company mobile phone (contract in company name, ex VAT)	£400	£0
Annual staff party (her share)	£150	£0
Relevant life cover	£600	£0
Total personal value received tax-free	£3,962	£0

If Amira paid for these herself out of dividends, her company would need about £7,610 of pre-tax profit (£3,962 ÷ (1 − 35.75%) ÷ (1 − 19%)). Claiming correctly uses £3,962, a saving of about £3,650 of profit a year.

On top of that, the company pays £10,000 into her pension as an employer contribution. Routed through dividends and a personal contribution instead, the same profit would put only about £6,505 into her pension (see pension contributions).

The company also buys a £1,400 laptop (100% Annual Investment Allowance) and £400 of training and professional subscriptions. These are fully deductible business costs, with no personal benefit to tax.

Illustrative figures using 2026/27 rates and 19% corporation tax.

A year-end expenses checklist

Before your company's year-end, check:

• ☐ All mileage claimed at 55p/25p for 2026/27 (and any 45p shortfall since 6 April 2026 topped up)
• ☐ £6/week working-from-home payments made, or a licence agreement in place
• ☐ Trivial benefits used (and logged) within £300 for each director
• ☐ Annual party costed within £150 per head
• ☐ Pension contributions paid (not just accrued) before year-end, if planned
• ☐ Equipment bought before year-end if you want the allowance this period
• ☐ Client entertaining coded separately so it can be added back
• ☐ Taxable benefits ready for P11D (due 6 July) or payrolled
• ☐ Director's loan account reconciled (expenses owed to you credited)

What you can't claim

Cost	Why not
Client entertaining	Specifically disallowed by law
Everyday clothing, even suits for meetings	Has a personal "warmth and decency" purpose. Only uniforms, branded workwear and protective clothing qualify.
Commuting to a permanent workplace	Private travel by definition
Fines and penalties (parking tickets, speeding, late-filing penalties)	Not incurred for the trade
Home improvements, e.g. a new kitchen or extension	Personal capital expenditure. A dedicated office build needs specific advice.
Personal subscriptions (Netflix, personal gym)	Not wholly and exclusively for the business
Your personal tax return fee	A personal cost. If the company pays, it's a benefit in kind.
Childcare (other than a qualifying workplace nursery)	Personal. Use Tax-Free Childcare instead.

How to claim: three methods

1. The company pays directly, using the company card or an invoice in the company's name. This is the best option, because the VAT invoice is in the company's name and the audit trail is clean.
2. You pay and the company reimburses you via a monthly expense claim with receipts attached.
3. Credit your director's loan account. If the company can't pay you yet, record the amount it owes you on your DLA and withdraw it tax-free later.

Reporting: P11D or payroll?

• Exempt items (trivial benefits, the qualifying annual event, AMAP mileage, one mobile phone, pension contributions) don't need reporting.
• Taxable benefits (company car, private medical insurance, gym) are reported on a P11D by 6 July after the tax year, and the company pays 15% Class 1A NI by 22 July (19 July by post). Alternatively, many can be payrolled.
• Payrolling benefits becomes mandatory for most benefits from April 2027, so plan ahead if you provide taxable benefits.

Record-keeping that holds up with HMRC

• Keep receipts and VAT invoices. Digital copies are fine.
• Keep a mileage log (date, from/to, purpose, miles) for every business journey.
• Note the business purpose on every claim ("train to client meeting, Leeds").
• Keep a trivial benefits log (date, item, cost, recipient, reason) to show you're within £300.
• Keep any use-of-home agreement and calculations.
• Keep records for at least 6 years from the end of the accounting period.

Common mistakes we fix

1. Still paying mileage at 45p in 2026/27. You can pay 55p, and backdate the shortfall to 6 April 2026.
2. Directors claiming £6/week working from home from HMRC personally. That route closed on 6 April 2026.
3. Trivial benefits as gift cards that can be swapped for cash, or as a reward for a good month, so they're taxable.
4. Putting the phone contract in your own name and having the company pay the bill, which makes it taxable.
5. Claiming client dinners as staff entertaining.
6. Giving Christmas hampers to clients and claiming them as gifts. Food and drink are excluded.
7. Directors-only parties where the company also has other staff, which loses the exemption.
8. No mileage log.

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Related guides

In-depth director expense guides: Trivial benefits · Working from home · Business mileage · Travel & subsistence · Mobile phone & broadband · Christmas party exemption · Entertaining & gifts · Pension contributions · Electric company car · Life cover & health insurance

Paying yourself tax-efficiently: Director salary 2026/27 · Dividend tax planning 2026/27 · Take-home pay calculator

Want us to handle it? Our limited company accountancy package includes expenses reviews, payroll and P11Ds for a fixed monthly fee. Book a free consultation.

General information for the 2026/27 tax year (6 April 2026 – 5 April 2027), not personal advice. Rates and rules change. Check your own position before relying on it.