Expense Tracking That Works

As a UK limited company director, you can claim expenses that are 'wholly and exclusively' for business purposes. This includes office equipment, software subscriptions, business travel, professional subscriptions, training courses relevant to your business, phone and internet costs (business portion), and client entertainment. The expense must be genuinely incurred for business reasons to be allowable.

HMRC requires you to keep records of all business expenses for at least 6 years. While receipts aren't always mandatory for small purchases under £25, it's best practice to keep them for everything. Bank statements alone may not be sufficient proof of the business nature of an expense. Digital copies of receipts are acceptable as long as they're legible and show the date, amount, and vendor.

Yes, if you work from home you can claim a proportion of household costs. You have two options: claim the flat rate of £6 per week (no receipts needed), or calculate actual costs based on the proportion of your home used for business. Actual costs can include a percentage of rent/mortgage interest, utilities, council tax, and broadband. The business proportion is typically calculated by rooms used or hours worked.

The trivial benefits rule allows your company to provide small benefits to employees (including directors) tax-free, as long as each benefit costs £50 or less, isn't cash or a cash voucher, isn't a reward for work performance, and isn't in your employment contract. There's no annual limit for employees, but directors of close companies are limited to £300 per tax year. Common examples include birthday gifts, flowers, or occasional meals.

If you use your personal car for business travel, you can claim HMRC's approved mileage rates: 45p per mile for the first 10,000 business miles per tax year, then 25p per mile thereafter. You can also claim 5p per mile for each business passenger. Bicycle mileage is 20p per mile. Keep a mileage log recording the date, destination, purpose, and miles travelled for each business journey.

Meal expenses are claimable when you're travelling for business and away from your normal place of work. You cannot claim for lunches at your regular office. Client entertainment (meals, events) can be claimed as a business expense but is not tax-deductible, meaning it reduces your profits but you still pay Corporation Tax on it. Staff entertainment up to £150 per head annually is tax-free if it's an annual event open to all employees.