What expenses can I legitimately claim through my limited company as a freelancer?
Direct Answer
You can claim any expense that is "wholly and exclusively" for business purposes against your corporation tax bill. Common claims include: home office costs (£6/week flat rate or actual calculation), business mileage (45p per mile for the first 10,000 miles), equipment and software, phone bills (business proportion), and professional training. Every legitimate expense reduces your company's taxable profit, saving 19–25% corporation tax on each pound claimed.
The golden rule
HMRC allows expenses that are "wholly and exclusively" for the purpose of the business. Dual-purpose expenses (partly personal) are generally not allowable — unless you can clearly separate the business element and document it.
Home office expenses
Flat rate
£6/week
£312 per year. No receipts needed and no calculation required. Just claim it.
Actual cost method
Calculate the business proportion of:
Rent or mortgage interest
Utilities (electricity, gas, broadband)
Council tax (business proportion)
⚠ Exclusive use may trigger CGT on property sale. Most accountants recommend the flat rate.
Travel and mileage
| Travel type | HMRC approved rate |
|---|---|
| Car — first 10,000 miles/year | 45p per mile |
| Car — over 10,000 miles/year | 25p per mile |
| Motorcycle | 24p per mile |
| Bicycle | 20p per mile |
| Public transport | Actual cost (keep receipts) |
| Hotels (business trips) | Actual cost |
| Subsistence (meals on trips) | Actual cost — must be away from normal place of work |
⚠ Commuting from home to a regular client site is not allowable if that site is your regular place of work.
Company car vs mileage claim — which is better for contractors?
Most contractors are better off claiming mileage at HMRC approved rates rather than putting a car through the company. Here is why.
| Mileage claim (own car) | Company car | |
|---|---|---|
| HMRC approved rate | 45p/mile (first 10,000) | N/A |
| Tax on benefit | None | Benefit in kind tax — can be substantial |
| NI on benefit | None | Class 1A NI — 13.8% of BIK value |
| Corporation tax deduction | Yes — on mileage payments | Yes — on running costs |
| Admin | Simple — log miles claimed | Complex — P11D, benefit calculation |
| Best for | Most contractors | High-mileage, low-emission vehicles only |
A contractor driving 8,000 business miles per year claims £3,600 tax-free (8,000 × 45p). The company deducts this against corporation tax — a saving of £684–£900 depending on the rate. No benefit in kind, no P11D, no complexity.
A company car triggers a Benefit in Kind (BIK) charge based on the car's list price and CO2 emissions. For a petrol car worth £30,000 with 120g/km CO2, the BIK charge is approximately £7,200/year — adding £2,880 to your personal income tax bill and £994 in employer Class 1A NI. Only electric vehicles (0% BIK rate in 2025/26, rising to 3% in 2026/27) make a company car attractive for most contractors.
Electric vehicles — the exception
An electric company car has a BIK rate of just 2% in 2025/26 (rising to 3% in 2026/27). On a £40,000 EV, the BIK is £800 — generating only £320 of personal tax at 40%. Meanwhile the company gets full corporation tax relief on lease payments and running costs. For higher-earning contractors considering an EV, running it through the company is worth modelling carefully with your accountant.
Equipment and technology
Computers, laptops, monitors
100% allowable under Annual Investment Allowance
Software and subscriptions
100% if used for business (Xero, Office 365, Adobe, etc.)
Phones
Business proportion only if dual use; 100% if dedicated business phone
Printers, peripherals, furniture
100% allowable (furniture at business proportion if home office)
Phones, broadband and software subscriptions
| Expense | Allowable? | Notes |
|---|---|---|
| Dedicated business mobile | 100% | Must be exclusively for business use |
| Personal mobile (dual use) | Business proportion only | Estimate % of business calls — typically 50–80% |
| Broadband (home office) | Business proportion only | Usually 25–50% — document the calculation |
| Xero / QuickBooks / FreeAgent | 100% | Accounting software — fully allowable |
| Microsoft 365 / Google Workspace | 100% | Productivity software — fully allowable |
| Adobe Creative Cloud | 100% | If used for business |
| Spotify / Netflix | 0% | Personal — not allowable |
| LinkedIn Premium | 100% | Business networking — allowable |
| Cloud storage (business) | 100% | Dropbox, Google Drive for business use |
The simplest approach: If you use a single mobile phone for both personal and business calls, claim the business proportion — most contractors estimate 50–70%. Keep the contract in the company name where possible for a cleaner audit trail. A dedicated business SIM through the company is simpler: 100% allowable, no calculation required.
Professional costs, training & marketing
Professional costs
Accountancy fees
Legal fees (business)
Professional indemnity insurance
Business bank charges
Training
Improves skills for current trade
Conferences and seminars
Trade journals and books
Training for a new trade
Marketing
Website costs
Advertising
Branded client gifts (up to £50/person/year)
Client entertainment / meals
Expenses contractors commonly miss
Relevant Life Insurance
Company-paid life insurance for directors. Premiums are a fully allowable business expense, not a benefit in kind, and not subject to Income Tax or NI. Significantly more tax-efficient than personal life insurance. A policy paying out 4–10x salary can cost £500–£1,500/year through the company — at 19% corporation tax, the effective cost is £405–£1,215.
Pension contributions
Employer pension contributions are an expense — and the most tax-efficient one available. Every £1,000 contributed saves £190–£250 in corporation tax and attracts no Income Tax or NI. Most contractors know about pensions in theory but do not claim them consistently. See the pension guide for full details.
Professional subscriptions and memberships
Industry body memberships (BCS, CIPD, CIMA, ICE etc.), trade journals, and professional development resources are fully allowable if relevant to your current trade. Keep the renewal receipts.
IR35 contract reviews and investigation insurance
The cost of an IR35 contract review (£100–£350) and IR35/tax investigation insurance (£150–£300/year) are fully deductible business expenses. Given that an IR35 investigation costs £15,000–£50,000 in professional fees without insurance, this is one of the highest-return expenses a contractor can claim.
Bank charges and interest
Business bank account fees, card fees, and interest on business borrowing are fully allowable. Many contractors forget to include monthly bank charges in their bookkeeping.
Accountancy and bookkeeping fees
Your monthly Autobooks fee is a fully deductible business expense. At 19% corporation tax, a £89+VAT/month fee costs the company £72/month net — £864/year after tax relief.
What you cannot claim
Non-allowable expenses — don't claim these
Personal clothing — even if worn for work (unless a uniform or protective clothing)
Client entertainment and business meals with clients
Fines and penalties of any kind
Anything with significant personal use that you can't clearly separate
What your expense claims are actually worth in tax saved
Every £1 of legitimate business expense reduces your taxable profit by £1 — saving 19–25p in corporation tax. Here is what common contractor expense claims save in practice.
| Annual expense | Gross cost | Corporation tax saving (19%) | Net cost after relief |
|---|---|---|---|
| Accountancy (£89+VAT/month) | £1,068 | £203 | £865 |
| Home office flat rate | £312 | £59 | £253 |
| Mileage (8,000 miles at 45p) | £3,600 | £684 | £2,916 |
| Laptop / equipment | £1,500 | £285 | £1,215 |
| Professional indemnity insurance | £300 | £57 | £243 |
| IR35 investigation insurance | £200 | £38 | £162 |
| Relevant life insurance | £800 | £152 | £648 |
| Mobile phone (dedicated business) | £600 | £114 | £486 |
| Training and CPD | £1,000 | £190 | £810 |
| Total example | £9,380 | £1,782 | £7,598 |
What this means: A contractor claiming all of the above saves approximately £1,782 in corporation tax per year — at zero cost to their take-home pay. The expenses are genuine business costs that would be incurred regardless. Claiming them correctly is not tax avoidance — it is basic tax compliance.
Claiming the right expenses is worth hundreds or thousands per year.
Autobooks provides proactive expense advice as part of every package — a good accountant pays for itself. From £89+VAT/month.