Most contractors claim the obvious things: travel to a client site, a laptop, software subscriptions. Then the claiming stops — usually not because there’s nothing left, but because nobody ever mentioned the rest.
Here are the expenses we most often find going unclaimed when a contractor moves to us. The general rule for all of them: the cost must be incurred wholly and exclusively for the business.
Working from home
If you do genuine work from home — admin counts — your company can pay you for it. Two routes:
- HMRC’s flat-rate allowance: a few pounds a week, no receipts, no calculations. Modest, but it’s money the company pays you tax-free.
- A calculated share of actual costs: a reasonable proportion of heating, electricity and similar running costs based on how you use your home for work. More effort and needs evidence, but often worth more.
Your mobile phone — done the right way round
A contract in the company’s name means the whole bill is a company expense, even with personal use. A personal contract the company reimburses is far less generous. Same phone, same calls — the paperwork decides the outcome. Worth fixing at your next renewal.
Pension contributions from the company
The big one. Employer contributions paid by your company into your pension are normally allowable for Corporation Tax, and they don’t use up your salary or dividend headroom. For a contractor with more profit than they need to live on, it’s usually the single most tax-efficient move available — and the one most often left on the table. Annual limits apply, and pensions lock money away, so this deserves a real conversation rather than a rule of thumb.
Training that keeps you current
Courses, certifications and learning materials that maintain or update the skills your company trades on are generally allowable. In a field that reinvents itself every three years, that’s not a small category.
The unglamorous rest
Individually small, collectively not:
- Accountancy fees (yes, ours)
- Professional indemnity and other business insurance
- Eligible professional subscriptions and trade bodies
- Business travel beyond the commute-like exclusions — including hotels and meals when working away
- A proportion of broadband where there’s genuine business use
- Equipment: monitors, desk, chair — the tools of the trade
One honest warning
Two traps catch confident claimers. Client entertaining is a legitimate company cost but not deductible for Corporation Tax — the company can pay, but the tax bill doesn’t shrink. And everyday clothing isn’t allowable even if you’d never wear it outside work. The rules are more sensible than people fear, but they do have edges.
If you suspect your company has been leaving some of this unclaimed, that’s a conversation worth having — it’s exactly the sort of thing we look at when a new client joins.
This guide is general information, not advice for your specific circumstances. Tax rules change, and how they apply depends on your situation — if you'd like to talk yours through, we're happy to help.
Quick answers
Can my company pay for my home office?
If you work from home for the company, it can pay you HMRC’s flat-rate home-working allowance without receipts, or a calculated share of actual household costs. The flat rate is small but effortless; the calculated route needs evidence but can be worth more.
Is client entertaining tax-deductible?
No — taking a client to lunch is a legitimate company expense but it isn’t deductible for Corporation Tax. It’s one of the most commonly misunderstood rules: the company can pay, but it doesn’t reduce the tax bill.
Can my limited company pay into my pension?
Employer pension contributions made by your company are normally an allowable expense for Corporation Tax and don’t count against your personal income — which is why they’re one of the most tax-efficient things a one-director company can do. Limits and conditions apply, so it’s worth a proper conversation.