A company expense is deductible when it is incurred wholly and exclusively for the purposes of the trade. Everything else follows from that.

Wholly and exclusively does not mean the cost has to be unusual. It means the reason you spent the money has to be the business. A laptop used for client work qualifies. A family holiday booked through the company does not, whatever the invoice says.

Mixed costs need splitting. A phone, a vehicle, a room at home. You claim the business share and leave the rest out. Where a split is not realistic, HMRC can disallow the whole amount.

Then there is the second question most directors skip. If the company pays for something personal, the cost does not vanish. It becomes a benefit in kind reported on a P11D, or it sits in your director’s loan account waiting to be repaid. Either route has a tax consequence. Paying it from the business card is not the same as claiming it.

When I run a set-up review, this is where the surprises usually are. Not in missing reliefs, in costs classified by habit rather than by the test.

These are the claims I add back in most often, because nobody ever told the owner they were available.

• Business mileage in your own car. For the 2026/27 tax year HMRC approved rates are 55p a mile for the first 10,000 business miles and 25p after that. Carrying a colleague on the same journey adds 5p per passenger per mile.
• Employer pension contributions. Paid by the company, usually deductible, and outside salary and dividends altogether.
• Use of home as an office. Either the homeworking allowance for employees or a proper licence covering a measured share of the running costs.
• Training that maintains the skills the company already sells. Renewals, CPD, ticket updates for trades staff.
• Professional subscriptions on HMRC’s approved list, and trade memberships the work depends on.
• Pre-trading costs incurred in the seven years before the company started trading.
• Bank charges, finance interest, and software you forgot was on a personal card.

None of this is aggressive. It is the stuff that falls out of the books when nobody is keeping a routine, which is why the routine matters more than the list.

A bank statement shows that money left the account. It does not show what the money bought, and HMRC has made that point painfully.

AccountingWEB reported an enquiry where a subcontractor electrician had every expense removed from four years of returns, 2018 to 2022, because the records were not there. Statements were offered. They were not accepted on their own.

What you want behind each claim is the invoice or receipt, a note of the business reason where it is not obvious, and a mileage log with dates and destinations if you are claiming travel. Keep company records for six years from the end of the accounting period.

Photograph receipts as you get them and attach them in the software. It takes seconds and it is the difference between a claim that holds and a claim that disappears years later, with interest and penalties attached.

If your previous accountant put round-sum figures in the accounts and never asked you for anything, that is worth checking before HMRC does.

Buy a van, a machine or a laptop and it does not go through as a normal running cost. It goes through capital allowances, and the rules moved this year.

The main rate writing-down allowance on the main plant and machinery pool dropped from 18 per cent to 14 per cent a year, effective from 1 April 2026 for companies. The special rate pool stays at 6 per cent. Where your accounting period straddles the change date, a hybrid rate applies based on how much of the period falls either side.

Alongside that, a new 40 per cent first-year allowance applies to main rate expenditure incurred from 1 January 2026. It carries fewer restrictions than other first-year allowances and reaches cases full expensing does not, including assets bought for leasing.

The practical point for an owner is timing. Buying the van a fortnight before your year end rather than a fortnight after can move relief a full year earlier. That only helps if someone is forecasting your corporation tax before the year end instead of telling you afterwards. See HMRC’s capital allowances guidance for the categories.

Some costs look allowable and are not. These are the ones I remove most often when a new company comes across.

• Client entertainment. Taking a customer to lunch is a real business cost and it is still not deductible for corporation tax. The VAT is not recoverable either. Staff entertaining is treated differently.
• Fines and penalties. Parking tickets, late filing penalties, speeding fines. None of them.
• Ordinary clothing. A suit you wear to meetings is not deductible. Protective gear and branded uniform are.
• Home to work travel. The commute to your normal workplace is personal, however far it is.
• Drawings dressed up as expenses. Money taken out and coded to sundries is a director’s loan. Read our note on the director’s loan account before it becomes a section 455 charge.
• The car. A company car is rarely the straightforward win owners assume. We set out the comparison in company car or car allowance.

Removing a bad claim is not a loss. It is the difference between a deduction and a liability you have not been told about yet.