It is probably one of the most common questions accountants get asked.
“Can I put this through the company?”
Sometimes the answer is straightforward. Sometimes it is a grey area. And sometimes the answer is a very definite no.
The difficulty is that there is a lot of misinformation online, particularly on social media, where business owners are often told they can claim almost anything as a business expense.
In reality, HMRC’s rules are much stricter than many people realise.
Below are some of the most common expenses we get asked about by contractors, freelancers and small limited company owners.
Mobile Phones
Usually yes.
If the company takes out the contract directly in the company name, this is normally an allowable business expense.
For many one-person limited companies, this is one of the simplest legitimate company costs.
Problems can arise where:
- the contract is personally owned
- there are multiple upgrades and handsets
- excessive personal use becomes difficult to justify
Laptops And Equipment
Usually yes, provided there is a genuine business purpose.
This can include:
- laptops
- monitors
- office equipment
- printers
- keyboards
- business software
If the equipment is being used partly for personal use, this does not always automatically block the claim, but it can complicate matters depending on the circumstances.
Home Broadband
Sometimes.
If broadband already existed personally before the business started, it is often difficult to fully justify as a company expense because there is personal use regardless of the business.
In many cases, accountants will instead look at whether a reasonable business proportion can be claimed.
Clothing
Usually no — and this surprises people.
Everyday clothing, even if only worn for work, is normally not allowable because HMRC considers it to have an “ongoing personal benefit”.
This means:
- suits
- smart shoes
- normal office clothes
- everyday jackets
are typically not allowable expenses.
However, specialist protective clothing or uniforms can often qualify.
Meals And Coffee
This depends heavily on the circumstances.
A coffee while working from your normal home office is usually not allowable.
However, meals during genuine business travel may qualify.
The key question is often:
“Was this expense incurred wholly, exclusively and necessarily for business purposes?”
That is the test HMRC applies to many expenses.
Gym Memberships
Usually no.
Even if improved fitness helps your work performance, HMRC generally views gym memberships as having a personal benefit.
There are very limited exceptions for certain professions, but for most limited company owners, gym memberships are not allowable company expenses.
Electric Cars
This is one of the biggest current tax planning areas.
In many cases, electric vehicles can still be very tax efficient when purchased or leased through a limited company due to:
- low Benefit In Kind rates
- Corporation Tax relief
- lower running costs
However, there are still important considerations around:
- personal use
- charging costs
- VAT recovery
- lease restrictions
It is definitely an area where proper advice matters.
Family Members On Payroll
Sometimes yes — but only if done properly.
Family members can potentially be employed by the company if:
- they are genuinely carrying out work
- the salary is reasonable for the duties performed
- proper payroll records are maintained
HMRC can challenge arrangements that appear artificial or excessive.
Holidays
Almost always no.
Trying to claim family holidays as business expenses is one of the biggest red flags for HMRC.
There are limited circumstances where genuine business travel is allowable, such as conferences or temporary work-related trips, but adding a short business meeting onto a personal holiday does not suddenly make the whole trip tax deductible.
The Problem With Social Media Tax Advice
One of the biggest issues today is short-form online content telling business owners they can claim almost anything.
In reality, tax is very fact specific.
Two people can have very similar expenses but completely different tax outcomes depending on:
- how the business operates
- who owns the asset
- the level of personal use
- how the expense is structured
- the supporting records available
That is why proper advice matters far more than generic online claims.
Final Thoughts
Just because something helps you run your business does not automatically mean HMRC allows it as a company expense.
The rules are often far narrower than people expect.
When in doubt, it is always better to ask before putting something through the company rather than trying to fix problems later if HMRC asks questions.
PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.
We specialise in providing friendly, non-accounting jargon, services for contractors, freelancers, sole traders, and landlords across the UK.
Our fixed fee monthly accounting packages all include a FreeAgent subscription as standard and unlimited support from your allocated accountant.
To find out how we can help you please get in touch now.
