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Business Expenses Guide for Sole Traders and Limited Company Directors in 2026 (Part 4)
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In the first part of this guide, we explored the fundamentals of allowable business expenses, along with the rules surrounding mobile phones and broadband. Now, let's turn our attention to some of the biggest purchases and claims that business owners ask us about.
These are often the expenses that involve the most money — and unfortunately, the most confusion.
I've lost count of the number of times a client has called and said, "I've just ordered a new laptop. I paid for it personally. Was that the right thing to do?" Or perhaps, "I'm thinking of buying an electric car through the company. Is it worth it?"
The answer is almost always the same: it depends. The good news is that with a little planning, you can often make these purchases in a much more tax-efficient way.
For many businesses, a laptop is no longer a luxury. It is the heart of the business.
Whether you're preparing accounts, attending video meetings, designing websites or managing projects, a reliable computer is an essential business tool.
The good news? In most cases, yes, your company can buy a laptop.
If the laptop is purchased wholly and exclusively for business purposes, it is generally an allowable expense.
That includes laptops used by:
The company simply purchases the equipment and records it in its accounts.
One of our clients, a structural engineer based in Kent, struggled with an ageing laptop that took nearly ten minutes to start each morning. He delayed replacing it because he assumed it would be expensive after tax. Once we explained how the company could purchase it directly, he upgraded immediately. Not only did his productivity improve, but the purchase was also made in one of the most tax-efficient ways available.
Sometimes spending money actually saves money.
This question catches many people by surprise.
Fortunately, HMRC generally accepts that incidental personal use of a company laptop does not create a taxable benefit.
For example, using the laptop to:
is normally not a problem, provided the laptop was supplied primarily for business use.
Buying a high-end gaming computer that rarely leaves the living room, however, would be much harder to justify.
As always, context matters.
The laptop is often only part of the picture.
Many businesses also purchase:
If these items are purchased for the business, they are generally allowable.
I recently met a marketing consultant who had gradually built up a home office over several years. Every monitor, microphone and webcam had been purchased using personal funds. Once we reviewed the invoices, the company was able to reimburse many of those business purchases correctly. It was a simple exercise, yet one that improved both the company's records and the director's personal cash flow.
Although the tax rules have evolved over the years, many qualifying equipment purchases continue to receive generous tax relief.
In practice, most small companies purchasing ordinary office equipment such as laptops and monitors can usually obtain tax relief relatively quickly.
That means there is often little advantage in delaying necessary purchases simply because of tax concerns.
Of course, timing still matters.
If you're planning a significant investment in equipment towards the end of your financial year, it is worth speaking to your accountant beforehand. A short conversation may help you maximise the available relief.
Technology purchases are easy to justify—provided you keep the paperwork.
Keep:
Cloud accounting software makes this much easier than it used to be.
Rather than storing faded paper receipts in a drawer, simply upload the invoice when the purchase is made. Your future self will thank you.
This is probably the single most misunderstood area of business expenses.
The answer is simple.
Yes, a limited company can buy a car.
The harder question is whether it should.
Depending on the type of vehicle, how much private use you have and how you extract income from the company, buying through the business can either save thousands of pounds — or cost thousands more than buying personally.
There is no universal answer.
It depends on several factors, including:
Imagine two directors. The first drives 20,000 business miles each year and very little privately. The second drives only 3,000 business miles but uses the car extensively at weekends and during holidays.
Although they own identical companies, the best tax solution may be completely different for each of them.
That is why personalised advice is so valuable.
When a company provides a vehicle that is available for private use, the director normally pays Benefit-in-Kind (BiK) tax.
The amount depends mainly on:
Higher-emission petrol and diesel cars generally produce much larger tax bills than low-emission vehicles.
This is one reason why the market has shifted so dramatically towards electric vehicles over recent years.
Electric vehicles remain one of the most tax-efficient company car options available.
Although Benefit-in-Kind rates have increased gradually in recent years, they remain significantly lower than those applying to traditional petrol and diesel cars.
For many directors, the tax savings can be substantial.
One client recently compared purchasing an electric SUV through the company with buying an equivalent petrol model personally.
After reviewing the numbers, the electric company car proved considerably more tax-efficient over the expected ownership period.
The figures were compelling.
More importantly, the client had confidence that the decision was based on facts rather than internet rumours.
If the company owns the vehicle, it can usually pay many of the associated running costs, including:
However, private fuel creates additional tax implications and should always be considered carefully.
This is another area where a brief conversation with your accountant can prevent an expensive mistake.
Buying through the company is not always the best solution.
In many cases, directors choose to:
Each option has advantages.
The important thing is choosing the option that fits your circumstances rather than following generic advice found online.
Mileage claims are one of the simplest ways to recover business costs.
Yet they are also one of the most commonly overlooked.
Many directors drive hundreds or even thousands of business miles each year without ever recording them.
That is money left on the table.
If you use your own personal vehicle for business journeys, you can usually claim HMRC's approved mileage rates.
These rates are designed to cover:
Rather than claiming each cost separately, you simply multiply your business miles by the approved rate.
It is straightforward and widely used.
The mileage rules differ depending on who owns the vehicle.
If:
If:
This distinction causes confusion every year.
Whenever a new client joins us, one of the first things we check is whether they are using the correct method.
Generally, business mileage includes travel such as:
Ordinary commuting between your home and a permanent workplace is normally not business mileage.
For example:
Driving from your home in Tunbridge Wells to visit a client in Canterbury is likely to qualify.
Driving from home to your regular office each morning generally will not.
Small differences matter.
You do not need anything complicated.
Simply record:
Several smartphone apps now do this automatically using GPS, making record keeping almost effortless.
One client admitted that he estimated his mileage from memory each January.
When we introduced a mileage-tracking app, he discovered he had actually travelled nearly 4,000 more business miles than he realised.
That translated into a much larger legitimate claim.
The most frequent mistakes include:
Fortunately, these mistakes are easy to avoid with good bookkeeping.
Consistency is far more important than perfection.
Technology, vehicles and travel often represent some of the largest costs incurred by business owners.
Handled correctly, they can also generate valuable tax savings.
In this part, we've learned that:
In Part 3, we'll look at another group of expenses that generate plenty of questions: working from home, meals and entertainment, and whether your company can contribute towards your mortgage. These are areas where the rules are often misunderstood, making it even more important to get the right advice before making a claim.
Disclaimer:
The content of this blog is for general informational purposes only and should not be considered professional tax advice. The information is correct at the time of publishing but may change following future UK budget announcements or updates to HMRC guidance. Individual circumstances vary, and tax obligations can differ based on your personal situation. We strongly recommend consulting with us or a qualified tax professional to receive advice tailored to your specific needs.
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