Company directors are entitled to claim certain expenses. This is the case whether you’re the sole director of a limited company, or the managing director of a small business.

In this post we’ll outline some of the expenses you can claim as a company director, along with any limits.

Please note that you should pay for all business expenses from a business bank account. Keep all of your personal expenses separate through paying for them from your personal account.

Be sure to check out our guide to allowable expenses for the self-employed, too.

Allowable Expenses For a Limited Company Director

Director Salary

Your salary as a limited company director is an allowable expense, and so too are your National Insurance contributions.

It’s up to you to decide how much your business pays you. Just make sure that the arrangement you decide on is in line with IR35 regulations. You can read our essential introduction to IR35.

You can also claim up to 100% tax relief on any contributions you make to your pension scheme – whether it’s for you, as a director, or for your employees.

Business Premises

If you rent external office space, your business can cover the cost of the rent, your utility bill payments, and any other associated expenses.

If you work from a home office, you can either claim:

• Basic allowance – Up to £26 a month if you work at least 25 hours per month from home.
• Apportioned cost – You can claim money back from your business to spend on household bills if you work one day a week from your home office. For this, you’ll have to calculate how much of your bills can be attributed to business use – whether that’s rent, mortgage payments, and utilities. You may ultimately have to provide HMRC with evidence to support your apportioned cost claim. Read our full guide to running a business from home.

Professional Services and Business Expenses

Your business can cover the costs of numerous professional services, including:

• Accounting and bookkeeping.
• Legal costs associated with starting a business.
• Marketing and advertising.
• Website design and hosting.
• Clothing and laundry bills (provided your work requires a protective uniform).
• Telephone and broadband costs.

You can also claim tax relief on some of these services. But check with HMRC for more information about which service costs are allowable expenses.

Other Tax Deductible Expenses

Certain other expenses can be tax-deductible, including:

• Entertainment – though you can’t claim tax relief for the costs of entertaining clients, you can do so for entertaining staff. This only applies to events that you hold every year, which are open to every employee, and which do not cost any more than £150 per head.
• Postage, stationery, and office supplies.
• Employee training and development – so long as the training’s relevant to their current role.
• “Trivial benefits” for employees. Read our full guide to what counts as a trivial benefit.
• Charity donations. Find out what types of donations are tax deductible for limited company directors.

Cars

When it comes to cars, there are different rules for allowable expenses depending on whether you’re driving a personal vehicle, or a company-owned vehicle.

You can sometimes claim tax relief for the fuel costs associated driving for work. However, the tax relief is usually only available if you’re travelling “on the job” rather than “to the job”. So you can claim relief if you’re travelling in the performance of your duties, but not for your standard commute.

It’s also possible to apply for tax relief if you purchase a car directly through the business – though you will have to pay tax if you drive this car for private use.

For more details of allowable expenses, limits, and exceptions, check the latest HMRC guidance here.

Other Travel Expenses

Your business can cover the costs of travelling by rail or plane to see a client and HMRC won’t consider it a taxable benefit. HMRC also doesn’t consider hotel accommodation as a taxable benefit if it’s covered by your business – but only if the hotel stay was for business purposes.

You can also apply for tax relief on parking fees and road tolls, while your business can cover the cost of food purchased during business trips.

Insurance

You can get full tax relief for some forms of insurance. Examples include:

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

Business insurance provides an essential safety net that will help you keep your company afloat when you’re faced with unexpected situations. Read our full guide to why you need business insurance.

We specialise in providing insurance to small businesses, start-ups and the self-employed. We tailor insurance to meet your needs and protect the specific risks you face as a limited company director.

If you have any questions or would like to discuss your options, please contact our Tapoly team at info@tapoly.com, call our helpline on +44(0)207 846 0108 or try our chat on our website.