What Expenses Can Company Directors Claim?
Six pounds a week. That's £312 a year, tax-free, with no receipts needed. It's what a limited company can pay a director towards the extra cost of working from home. When I ask new director clients across Tunbridge Wells and Sevenoaks whether their company pays them anything for it, the answer is usually a shrug. Nobody has ever mentioned it.
That's the pattern with director expenses. The rules aren't hidden. They're just scattered, a little technical, and easy to get wrong in either direction. Some directors claim nothing and quietly overpay tax. Others claim everything and wait for a letter from HMRC.
I'd like to help you land in the sensible middle. This guide looks at what company directors can claim for travel, working from home, mobile phones and professional subscriptions, and, just as importantly, how to keep the evidence that makes those claims stand up. If you'd like to read about the company's wider expense claims, our guide to what expenses a limited company can claim covers office costs, staff and technology. This one focuses on you, the director.
Here's a point that confuses many new directors. A limited company is a separate legal person, and as a director you are normally also an employee of it. So when you pay for something that is genuinely for the business, you aren't claiming a tax deduction yourself. The company reimburses you, and the company claims the deduction against its Corporation Tax.
For the reimbursement to be tax-free to you, the cost has to be one that you would be able to deduct if you were an employee, which means it must be incurred wholly, exclusively and necessarily in doing your job. The same test applies to your company's own claim in slightly different words. A business trip passes. A weekend away with a meeting added does not.
If the company pays for something that isn't a business cost, or reimburses a cost that doesn't qualify, the amount is treated as a benefit or a loan to you. That brings tax charges of its own, which I've covered in our director's loan account guide.
One piece of good news. Expenses that fall within the statutory exemptions don't need to be reported on a P11D at all, as long as they're paid or reimbursed in the right way. It's one reason the rules are worth learning properly.
If you use your own car for company business, the company can reimburse you at HMRC's approved mileage rates, tax-free. From 6 April 2026 the rate is 55p a mile for the first 10,000 business miles in the tax year and 25p a mile for every mile beyond that. Motorcycles are 24p and bicycles 20p. The 55p rate is the first rise in the main rate for fifteen years. If the company pays less than these amounts, you can usually claim tax relief on the difference yourself. If it pays more, the excess is taxable.
The rate is the same whatever you drive, including electric and hybrid cars, so a director with an electric vehicle gets the same 55p for each business mile as a director with an older diesel.
A passenger rate also exists. If you carry another employee on a business journey, the company can pay you an extra 5p a mile for each passenger, tax-free.
This is where most of the questions arise. Business travel is travel in the performance of your duties, or to a temporary workplace. Ordinary commuting, which is travel between home and a permanent workplace, is not.
For a director who works from a company office, the daily journey to that office is commuting. For a director who works mainly from home, as many consultants and contractors in Kent do, trips to clients are generally business travel. A client site becomes a "permanent workplace" if you expect to attend it for more than 24 months, or for most of your working time. After that point, the journeys become commuting.
I once helped a software consultant from Tunbridge Wells who'd been travelling to the same client in Maidstone three days a week for nearly three years. For the first two, his mileage claims were completely fine. After that, they weren't. Nobody had told him about the 24-month rule, and we had to correct the final year.
The actual cost of public transport for business is reimbursable in full. A Southeastern train from Tunbridge Wells to London for a client meeting, a taxi from the station, a flight to a conference and a hotel for the night are all fine, provided that the purpose is genuinely business.
Keep the receipt or e-ticket. For rail journeys, a screenshot of the booking confirmation usually works, and some train operators will email a copy of any ticket later.
If you're travelling on business and have to eat away from your usual place of work, the company can reimburse the reasonable cost of a meal. A sandwich on the way to a client meeting qualifies. Your usual lunch at your desk or at home does not.
HMRC also publishes benchmark scale rates, which allow companies to pay a fixed amount for meals on qualifying journeys without collecting receipts for each. They're useful for directors who travel often. Ask us if you'd like to set up a scheme.
Business parking, tolls such as the Dartford Crossing charge, and congestion or emissions zone charges incurred on business journeys are all reimbursable. Penalty notices, on the other hand, are not. A parking ticket stays personal, however urgent the meeting was.
If the company buys a car for you, the picture changes. The company claims capital allowances and running costs, but you are taxed on private use as a benefit in kind, and the company pays Class 1A National Insurance on that benefit. For a zero-emission car, the benefit-in-kind rate is 4% of the list price in 2026–27, rising to 5% in 2027–28, 7% in 2028–29 and 9% in 2029–30. These rates are far lower than for petrol or diesel cars. The rules on allowances for cars change often, so please take advice before you buy.
The simplest way to cover home working costs is the household expenses exemption. The company can pay you £6 a week, which is about £26 a month or £312 a year, towards the additional cost of working from home. There's no income tax or National Insurance on it for you, and no National Insurance for the company. You don't need to provide receipts.
You do need a genuine arrangement to work at home regularly, either because the job requires it or because the company has no suitable premises for you. For most owner-managed businesses, that is easily satisfied.
A graphic designer I worked with in Tonbridge had worked from a spare bedroom for three years without being paid a penny for it. The £6 a week alone would have been over £900 in tax-free payments across that time.
If your additional costs are higher than £6 a week, the company can reimburse more, provided you can show the actual extra costs. These might include the extra heating and electricity used while you're working, and the business share of your broadband and phone. You'll need to keep the bills and a short note of how you worked out the business proportion.
For most directors, the evidence is hard to produce with precision, which is why the flat £6 is so popular. But if you have a dedicated workshop, a heated outbuilding or an unusually high energy bill because of equipment, the actual costs may be worth calculating.
Equipment you need for the job is a separate matter. A desk, chair, monitor or printer purchased for your home office can be bought by the company. If it's used for the business, the company can claim capital allowances, and you won't be taxed on it. Make sure it's the company's property, and used for work.
Some directors ask about charging the company rent for a room in their home. It can be done, but it comes with consequences. Rental income is taxable for you, and a room used exclusively for business can affect the private residence relief on your home if you sell. For the small sums involved, it is rarely worth it. If you're considering it, speak to us first.
Council tax, mortgage interest, home insurance and general household bills don't belong in a company claim. They're costs of living, not of working. A fair share of broadband is acceptable. The whole bill isn't.
Mobile phones are one of the few perks the rules treat generously. If the company holds the contract and pays the bill, one mobile phone per director or employee is exempt from benefit in kind, even if it is used privately too. That includes the cost of a smartphone, the monthly contract or SIM-only plan, and the calls and data.
The key words are "in the company's name". If the contract belongs to you, and the company pays it, the exemption doesn't apply in the same way. Putting the contract in the company's name is a simple fix, and it can save an awkward conversation later.
If you use your personal phone for business and the contract is in your name, the company can reimburse the business element of the calls. You'd need an itemised bill showing business calls, or a reasonable record of how you calculated the split. It is more work than a company contract, and I usually advise moving to one.
The exemption covers one phone. A second phone for yourself, a phone for your spouse, or a family data plan paid for by the company is likely to be a taxable benefit. The same goes for a phone you buy outright for personal use. I worked with a company in Sevenoaks that had put four family handsets on its business account because the "bundle was cheaper". It was cheaper, but it also created a benefit-in-kind liability that had to be reported for two years.
A landline or broadband connection at home is treated differently. Only the business share of the cost is claimable, and it needs to be worked out and recorded. If you've already received the £6 a week, check that you're not claiming broadband twice.
If your company pays your membership of a professional body, it can be tax-free for you, as long as the body is on HMRC's approved list and the membership is relevant to your work. The list includes many well-known institutes and societies, in fields such as accountancy, law, engineering, surveying, human resources and the sciences. Check the list before assuming. Not every association, however respectable, appears on it.
The company can deduct the cost, and you aren't taxed on it. If the membership is not on the list, the payment may be a taxable benefit.
A company's own membership of a trade association or local business group is a different matter. Fees to a trade body, or to a local Chamber of Commerce, are generally allowable for the company if the membership benefits the trade. Many businesses in Kent find these groups useful for introductions and local contacts.
Subscriptions to trade journals, professional publications and online learning platforms are normally allowable if they relate directly to your work. The same goes for continuing professional development that maintains or updates existing skills. Training to enter a wholly new profession is a different matter, and isn't normally covered.
Gym memberships, golf clubs, wine clubs, general interest magazines and personal streaming subscriptions don't qualify, however much business conversation takes place on the course. They'd be personal costs, taxed as such.
Every claim I've described depends on evidence. If HMRC asks about an expense, you'll need to show what it was, when it was incurred, how much it cost and why it was for the business. A claim without evidence isn't a claim in HMRC's eyes, and it may be treated as a payment to you, taxed accordingly.
In practice, the penalty for careless errors on a tax return can be up to 30% of the extra tax due, and deliberate errors cost far more. Good records are the cheapest insurance you can buy.
For each expense, aim to keep:
Company records must be kept for at least six years from the end of the accounting period they relate to. That applies to receipts, invoices, mileage logs and expense claim forms. A digital copy is fine. A photograph of a receipt is generally acceptable, provided it's clear and legible.
The routine I recommend is deliberately dull. Once a month, fill in a one-page claim form or spreadsheet listing every business cost you paid personally. Attach the receipts, and total the mileage. Submit it to the company, and have the company repay you by bank transfer, with a reference. Your accountant then records it correctly.
I helped a Crowborough consultant set up exactly this, and the change was dramatic. Before, he had a shoebox of crumpled receipts and about £3,000 of unexplained transfers on his director's loan account. After three months, every pound had a label.
Cloud accounting software makes it easier still. Most packages let you photograph a receipt on your phone and attach it to the transaction in seconds. If you're not yet using one, it's worth asking us about.
Quick answer: Company directors can claim, through their company, the costs of business travel, a flat £6 a week for working from home, one mobile phone contract in the company's name, and approved professional subscriptions, as long as the costs are wholly and exclusively for the business. The company reimburses these tax-free. Evidence is what makes them stand up.
What this means for a company director: You're an employee of a separate legal person. Business costs you pay personally can be reimbursed by the company, and the company claims a deduction. Personal costs can't. Everything you claim should have a receipt, a date, an amount and a reason.
Example: A consultancy director drives 7,200 business miles in 2026–27, which at 55p a mile comes to £3,960. The company also pays £312 for working from home, £420 for a mobile phone contract in its name, and £250 for an approved professional membership. That is £4,942 in total. The director receives the money with no income tax or National Insurance, and the company saves about £939 of Corporation Tax at the 19% rate. Without the claim, the director would have paid those costs from taxed income.
Common mistakes: Claiming commuting as business travel; putting a phone contract in your own name and expecting the exemption; reimbursing more than HMRC's mileage rate; claiming broadband twice; and failing to keep receipts and a mileage log.
When should you speak to an accountant? Before you buy a car through the company, before you charge the company rent for part of your home, when you start travelling regularly to the same client site, and whenever you're unsure whether a cost is business or personal.
Getting director expenses right is mostly about habit, and a few clear rules at the start. At Peter Hodgson & Co, we help company directors across Tunbridge Wells, Tonbridge, Sevenoaks and the wider Kent and South East area set up simple, compliant systems, claim everything they're entitled to, and avoid the mistakes that cost money later.
If you'd like a second opinion on what your company is paying you, or you're about to start a company and want to do it properly from day one, we'd be glad to hear from you. You can complete the "Contact Us" form on our website, call us on 01892 515 733, or send us an email at info@peterhodgson.co.uk.
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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