2026/27 · Limited Company · Allowable Expenses
LTD Company Expenses 2026/27
Every allowable expense for a UK limited company contractor working outside IR35 in 2026/27. Searchable, filterable, with HMRC limits and what changed from last year.
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People
Property
Travel & motoring
Equipment & tech
Benefits
Professional
Marketing
Finance
R&D
All Allowable Expenses
| Category | Expense | Description & 2026/27 rules | Key limit / rate |
|---|---|---|---|
| People | Director salary | Your own salary through PAYE is fully deductible. Keep it commercially reasonable. Optimal level is typically £12,570 (personal allowance) to minimise NIC. | No cap |
| People | Employee salaries | All staff wages including bonuses are deductible, provided amounts are commercially justified. Artificially inflated family salaries can be challenged by HMRC. | No cap |
| People | Employer NIC | Class 1A employer NIC is a deductible expense. Rate is 15% on earnings above the secondary threshold. | 15% above £5,000 |
| People | Employer pension contributions | Contributions to a registered pension scheme for director or employees are fully deductible and reduce profit before CT. One of the most tax-efficient extraction routes available. | Up to £60,000/yr per person |
| People | Recruitment costs | Job board fees, agency fees, and related advertising to hire staff. Fully deductible as a revenue expense. | Wholly & exclusively rule |
| People | Staff training | Training that maintains or improves skills relevant to the existing role is deductible. Training for a new trade or profession is not. | Relevant to current role |
| People | Statutory sick & parental pay | Employer costs for SSP, SMP, SPP etc. are deductible. HMRC allows recovery of some of these through the payroll system. | Statutory rates apply |
| Property | Office rent | Business premises rent is fully deductible. Includes coworking space and serviced offices. | Wholly business use |
| Property | Business rates | Rates on business premises are deductible. Small Business Rate Relief may reduce or eliminate the charge depending on rateable value. | Full amount |
| Property | Utilities (office) | Gas, electricity, water, and broadband for business premises are fully deductible. | Business proportion only |
| Property | Home office (flat rate) | Company can pay you £6/week (£312/year) tax-free without receipts if you work from home regularly. No P11D required below this threshold. | £6/week flat rate |
| Property | Home office (actual costs) | Alternatively, apportion actual additional household costs (heating, electricity, broadband) by business-use percentage of rooms and hours. Requires evidence. | Apportioned amount |
| Property | Property insurance | Business premises insurance is fully deductible. Contents, public liability, and professional indemnity cover are also allowable. | Business policies only |
| Property | Repairs & maintenance | Revenue repairs to business premises are deductible. Capital improvements are not — they go through capital allowances instead. | Revenue repairs only |
| Travel | Business mileage (own car) | Reimburse yourself or employees using AMAP rates. Tax-free up to the approved rate; excess is taxable. No fuel benefit charge at AMAP rates. | 45p/mile (first 10k), 25p after |
| Travel | Company electric car (purchased) | 100% First Year Allowance on new EVs — full cost deducted in year one against CT. Home charging installation also qualifies. BiK rate rises to 4% in 2026/27. | 100% FYA; BiK 4% (up from 3%) |
| Travel | Company petrol/diesel car (leased) | Lease payments deductible but 15% is disallowed for cars with CO2 >50g/km. Cars ≤50g/km get full relief. EV leases: full deduction + 100% VAT reclaim on maintenance. | 15% disallowance if CO2 >50g/km |
| Travel | Company electric van | BiK on an electric van remains £0 for 2026/27 — employees pay no tax on private use. No fuel benefit charge for charging. | £0 BiK — fully tax-free |
| Travel | Public transport (business) | Train, bus, taxi and air travel for business purposes are fully deductible. Must be for business journeys only; commuting to a regular workplace is not allowable. | Business journeys only |
| Travel | Business accommodation | Hotel and other accommodation when travelling for business is deductible. Personal extensions to business trips cannot be claimed. | Business nights only |
| Travel | Business subsistence | Modest meal and drink costs while away from normal place of work on business travel. Must be additional to normal spend. HMRC expects reasonable amounts. | Reasonable amounts only |
| Travel | Parking (business) | Parking fees incurred during business travel are deductible. Season tickets for a regular commute are not. | Business journeys only |
| Equipment | IT equipment (AIA) | Laptops, monitors, servers, peripherals — full cost deducted in year one under Annual Investment Allowance. New 40% FYA also applies to main-rate assets from Jan 2026 spend. | £1m AIA; or 40% FYA (new) |
| Equipment | Plant & machinery (WDA) | Assets not claimed under AIA or full expensing use Writing Down Allowances. Main pool rate drops to 14% from April 2026 (from 18%). Special rate pool stays at 6%. | 14% WDA (down from 18%) |
| Equipment | Software subscriptions | SaaS subscriptions (Microsoft 365, GitHub, cloud tools, Xero, etc.) are fully deductible as revenue expenses in the period paid. | Wholly business use |
| Equipment | Mobile phone (company contract) | Where a single mobile contract is in the company name and used for business, no BiK arises. Personal use of a company phone is generally ignored if the contract is with the company. | Company-name contract only |
| Equipment | Broadband (business) | Dedicated business broadband is fully deductible. Home broadband used partly for work must be apportioned. | Business proportion |
| Equipment | Office furniture & equipment | Desks, chairs, printers and similar items purchased for business use qualify under AIA for immediate full deduction. | Under AIA (£1m limit) |
| Benefits | Trivial benefits (director) | Non-cash gifts under £50 each are tax-free with no P11D reporting. Directors of close companies (≤5 shareholders) are capped at £300 total per tax year. Must not be contractual or performance-linked. | £50/gift; £300/yr cap (director) |
| Benefits | Trivial benefits (employee) | Same £50-per-gift rules as director. Employees who are not directors of close companies face no annual cap — multiple qualifying gifts can be given throughout the year. | £50/gift; no annual cap (employees) |
| Benefits | Annual staff events | Christmas party, summer event etc. are deductible provided the total cost across all annual events doesn’t exceed £150 per head (including VAT). Must be open to all staff. | £150/head across all events |
| Benefits | Eyesight tests (DSE) | Cost of eye tests required under Display Screen Equipment regulations is fully exempt and deductible. Corrective equipment needed solely for DSE work is also exempt. | Fully exempt |
| Benefits | Private medical insurance | PMI provided to employees is a deductible company expense but is a taxable BiK for the recipient — income tax + 15% Class 1A NIC applies. Director PMI is often claimed this way. | Deductible; BiK taxable to employee |
| Benefits | Gym/wellbeing (staff) | Gym membership or on-site fitness facilities provided to all employees can be arranged as a BiK or through salary sacrifice. Business gets the deduction; employee pays BiK tax. | BiK applies unless on-site/all-staff |
| Benefits | Cycle to work scheme | Employer-funded bikes/equipment via salary sacrifice are exempt from tax and NIC for the employee, deductible for the company. No monetary value limit since 2019. | No cap since 2019 |
| Professional | Accountancy fees | Costs of preparing statutory accounts, filing the CT600, self assessment, payroll, and general tax advice are fully deductible. | Fully deductible |
| Professional | Legal fees (trading) | Legal costs directly connected with trading activities — contracts, debt recovery, employment disputes — are deductible. Capital legal costs (e.g. acquiring an asset) are not. | Trading-related costs only |
| Professional | Professional subscriptions | HMRC-approved professional body memberships relevant to the business are deductible (e.g. CIMA, BCS, Law Society). Personal interest subscriptions are not. | HMRC-approved list |
| Professional | Business insurance | Professional indemnity, public liability, employers’ liability, and relevant trade insurance are fully deductible. | Business policies only |
| Professional | Consultancy & contractor fees | Payments to freelancers and external consultants for genuine business services are deductible. IR35 status of engagements must be assessed. | Subject to IR35 rules |
| Professional | Company formation costs | HMRC does not allow the cost of originally setting up the company. Pre-trading expenses incurred within 7 years before the business starts are treated as incurred on the first day of trading. | Pre-trading: 7-yr window |
| Marketing | Advertising & promotion | Online ads, print, SEO, PR, branded merchandise — all deductible provided they promote the business. Includes ongoing website hosting and domain costs. | Wholly promotional |
| Marketing | Website costs | Design, development, and hosting of a business website are deductible. Capital development may go through capital allowances; annual hosting is revenue. | Revenue vs capital split |
| Marketing | Sponsorship | Sponsorship costs with genuine commercial benefit (logo placement, brand exposure) are deductible. Personal donations or non-promotional sponsorships are not. | Must be genuinely promotional |
| Marketing | Client gifts (branded) | Gifts to clients are deductible only if: cost ≤£50 per recipient per year, not food/drink/tobacco, and they carry a visible business advertisement. | ≤£50; must carry branding |
| Marketing | Bad debts | Specific irrecoverable debts can be written off as a deductible expense, provided the income was already included in accounts and the debt is genuinely irrecoverable. General provisions do not qualify. | Specific debts only |
| Finance | Bank charges | Business account fees, transaction charges, and related banking costs are fully deductible. | Business accounts only |
| Finance | Loan interest (trading) | Interest on loans taken out for business purposes is deductible. Subject to Corporate Interest Restriction (CIR) rules where net interest exceeds 30% of UK EBITDA. | CIR limits above £2m de minimis |
| Finance | Hire purchase interest | Interest element of HP agreements for business assets is deductible as a finance charge. Capital element goes through capital allowances. | Interest element only |
| Finance | Charitable donations (Gift Aid) | Cash donations to HMRC-recognised charities via Gift Aid are deductible. Non-Gift Aid donations are generally not deductible for corporation tax. | Gift Aid only |
| Finance | Dividend payments | Dividends are NOT a deductible expense — they are a distribution of post-tax profit. Dividend tax rates rise in 2026/27 to 10.75% (basic) and 35.75% (higher rate). | NOT deductible |
| R&D | R&D revenue costs | Staff costs, consumables, subcontracted R&D, and software costs connected with qualifying R&D projects are deductible. SME scheme provides enhanced relief or payable credit. | SME: 86% enhanced or 10% credit |
| R&D | Patent Box regime | Profits attributable to patented inventions attract a reduced 10% CT rate instead of 25%. Requires active management of qualifying IP. | 10% CT rate on patent profits |
Disclaimer: This guide is for general information only and does not constitute tax advice. Expenses must satisfy the "wholly and exclusively for trade" test. Always consult a qualified accountant for your specific circumstances. Rates and thresholds are based on HMRC guidance for the 2026/27 tax year.