Startup Expenses UK 2026: What You Can and Can’t Claim

Last Updated on 9 June 2026

Money’s tight when you’re a startup. The last thing you want is to miss out on reclaiming expenses you incur as you start to build your business.

But while you’re busy assembling a team, working on developing your product or service, marketing your brand and doing all the other things that new business owners need to do worry about, it’s easy to forget about keeping an eye on the finances.

Looking for help online isn’t always easy either. There’s plenty of information spread around on gov.uk, but its guides run to more than 100 pages and finding and reading all that certainly can be … “taxing”.

So, what expenses can startup businesses claim? Our Accounting & Business Solutions team have pulled together this article to highlight the most common areas where you can (and can’t!) claim expenses for your startup.

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What expenses can a startup claim? (Quick list)

Startup businesses in the UK can typically claim:

• Pre-trading costs (up to 7 years)
• Office equipment and software
• Travel and mileage
• Marketing and advertising
• Professional services (accountants, legal)
• Business insurance
• Phone and internet

They must be “wholly and exclusively” for business use.

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The “wholly and exclusively” rule for business expenses

Claim only for the expenses that you incur which are wholly, exclusively and necessary during the everyday running of your business.

Capturing all your costs is the key to not missing out. We often see startups not claiming for expenses that are perfectly legitimate. So, hold on to your receipts, because expense claims for the following are likely to be tax deductible.

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Pre-trading expenses: what you can claim before starting your business

It’s easy to assume that you can claim for expenses only after you start your business. In fact, limited companies can claim relevant expenses for up to 7 years before the business begins operations.

Here are some areas where business expenses may be tax deductible:

• computers & software
• internet & web domain fees
• travel costs
• professional services

Laptops and tablets can be a grey area for expenses, because their portability means they’re often used at work and at home. If you’re confident that you can justify the expenditure based on a real business need, you should be fine to claim these.

Professional services can include the costs associated with accounting and legal help, such as company formation and the drafting of contracts.

There may be some items that count as business expenses but that are not allowable as tax deductions. Not all business expenses are tax deductible.

Try to maintain an accurate record of pre-formation and running costs, including VAT receipts. Doing so helps you justify your actions should your business expenses claims be queried.

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Business insurance expenses you can claim

You can claim the cost of your business insurance policies as limited company expenses, so long as they’re used strictly for business purposes.

Allowable expenses for business insurances include:

• public liability insurance
• employers’ liability insurance
• professional indemnity insurance
• contents insurance
• vehicle insurance (if you have company vehicles)

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Marketing, advertising and PR expenses for startups

Promoting your startup is an important part of building momentum for your new business. So, the following are claimable on your company expenses:

• advertising (online, print & other media)
• social media campaigns
• PR

These expenses can be for one-off promotions or ongoing costs, so long as the investment relates solely to business purposes.

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Travel and mileage expenses: what startups can claim

Travelling and overnight stays put a strain on your time as a business owner, but many of the related expenses can be reclaimed:

• accommodation costs for business trips with overnight stays
• reasonable food, drink and subsistence costs
• business mileage costs

There is an HMRC-approved scheme for claiming mileage. Keeping a mileage log and using this scheme is a quick, easy way to reclaim travel costs. Keep in mind that you have to satisfy the following for your expenses to be valid:

• You’re responsible for paying the travel costs.
• The travel is necessary for work purposes and you need to be present at the destination in question for business purposes. (This doesn’t include the everyday commute between your home and permanent workplace.)

HMRC mileage rates for 2026/27

If you use your personal car or van to travel to a temporary place of work and you’ve paid for the fuel out of your own pocket, you can claim the following rates as limited company expenses:

• car/van – 55p per mile for the first 10,000 miles and then 25p for every mile thereafter.
• motorcycle – 24p per mile
• bicycle – 20p per mile

Claiming the above rates doesn’t just lower your total Corporation Tax bill, it also means you can reimburse yourself for the amount claimed.

As well as the mileage rates listed above you can also claim the following as business expenses:

• parking costs (but parking fines are not allowable)
• road toll fees
• congestion charges
• hotel rooms (within reason)
• food and drink on overnight trips
• public transport, including train, bus, air and taxi fares
• vehicle Insurance (company vehicles only)
• vehicle repairs and servicing (company vehicles only)

Note that travel doesn’t have to mean long distances: trips to banks, solicitors and other short but necessary business travel can all be claimed. It may not seem like much, but it all adds up over the course of a year. 

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Bank fees, interest and financial expenses

Keeping your money safe and handling transactions are necessary parts of doing business. Therefore, bank fees charged to your business accounts can be claimed as valid business expenses. That also includes claims for credit card and loan interest.

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Use of home as office (working from home expenses)

If you run your business from home, you can claim a portion of your household costs as business expenses.

To qualify, the costs must relate to your business use and follow HMRC’s “wholly and exclusively” rule, meaning only the business element can be claimed.

There are two ways to claim home working expenses:

1. Simplified flat rate (easy method)

HMRC allows a simplified method, where you claim a fixed weekly amount instead of calculating exact costs.

• Commonly around £6 per week
• No need to keep detailed household bills
• Ideal for most startup owners and small businesses

2. Actual cost method (more accurate)

Alternatively, you can calculate the exact business proportion of your home costs, including:

• heating and electricity
• broadband and phone usage
• rent or mortgage interest (not full mortgage payments)

This is usually based on:

• how many rooms you use for business
• how much time they’re used for work

This method can result in a larger claim, but requires more detailed record keeping.

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Staff entertainment, gifts and trivial benefits: what’s allowed

Staff entertainment and staff gifts can be claimed as business expenses. However, there are limits to what can be allowed for tax purposes.

Cash gifts to staff, or gifts that are performance related (such as rewards), are taxable on the employee, whereas flowers for a staff member would be perfectly acceptable.

For staff events and parties, the costs of entertaining your employees can be claimed as a business expense if it’s an annual event open to all staff members and costing less than £150 per person.

Any client entertaining, even if it’s a genuine business expense, is not allowable for tax purposes.

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Phone, mobile and internet expenses for business

Communication utilities, including phone and broadband access, can be claimed as a limited company expense.

If your mobile phone contract is in your company’s name and it relates solely to business purposes, you can claim the entire bill as a business expense.

If it’s a personal contract, you’ll need to separate the business and personal use and then claim for only the business-related expenses. You can also claim limited company expenses for the business calls you’ve made from your home phone line.

HMRC have looked closely at this issue in recent years. If your phone contract is used for both personal and business but you easily identify what the business costs are, you’re advised not to claim any of it.

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Equipment and capital expenses (including laptops and vehicles)

Plant and equipment purchases can be claimed so long as they’re used mainly for business purposes. Examples include:

• computers
• company vehicles
• furniture

These costs will likely be treated as capital expenditure and end up as assets on your Balance Sheet rather than your normal expenditure. You’ll get the tax deduction for them in your Corporation tax return, under HMRC’s Capital allowance rules.

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Training, subscriptions and professional development expenses

Personal development and training courses can be claimed as limited company expenses. Any training has to be wholly and exclusively for the purposes of your trade. If in doubt, check eligibility before adding such expenses to your records. 

You’re also allowed to claim expenses for magazine subscriptions, journals and books.

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Salary and director pay: what counts as an expense

If your startup is a limited company and you’re a director, it’s normal for you to pay yourself a salary as an employee of your business. That salary and the corresponding National Insurance Contributions (NIC) can be claimed as allowable expenses.

Once you reach the National Insurance threshold, you’ll have to start paying NIC.

Though it goes beyond the scope of this article, we’d encourage you to think about how you’re paying yourself. For example, some business owners take a minimal salary and then use dividends to help with their personal allowance.

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Pension contributions as a business expense

Thoughts of pensions might be a long way off when you’re just getting rolling with a startup business.

But if you’re the type to think ahead, keep in mind that your limited company can pay into your pension scheme. 

As an employer contribution, this would be an allowable tax deduction from the company profits, therefore reducing the tax payable by the company.

There are limits on how much money the company can pay into your pension in any one tax year.

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Expenses you can’t claim as a startup (HMRC rules)

Remember that you can claim only for the expenses that you incur which are wholly, exclusively and necessary during the everyday running of your business.

You can’t claim for expenses that have a dual purpose for business and personal use. For example, if you decide to extend a business trip abroad for leisure purposes, you can claim only for the business days.

As per the section about phone bills, you need to differentiate clearly between business and personal use in order to claim expenses on a personal mobile contract. That’s why it’s probably best to set up your contracts in your business name.

Here are some general examples of expenses that can’t be claimed for:

• home to work journey
• most client entertaining
• business trips that you extend for personal holiday
• anything for personal use

In practice, that hasn’t stopped some of our clients trying to claim for expenses that were never going to make it through.

Real examples of disallowed business expenses

Here are some real examples that again can’t be claimed for:

• trips abroad being claimed as annual AGM costs for their spouse’s company
• family meals out being claimed as shareholder meetings
• sports season tickets being claimed as “sponsorship”
• kids’ bikes being claimed through the cycle to work scheme
• petrol receipts being claimed through the business, when the company owns only a diesel vehicle
• multiple iPhones/iPads going through the business around December time, despite there being only one director/employee in the company
• games consoles described as computers in the client’s cashbooks

Remember to stick with what’s reasonable: only genuine business expenses count.

If you’re in doubt about what’s a reasonable expense, do check with your accountant. And if there’s a grey area, you might be safest not to claim.

Business expenses may be paid through your company’s bank account, or you can reclaim the costs of business expenses paid by you and later reimbursed via your company.

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In summary

As you can see from the lists above, there’s a vast array of things that startup businesses can claim for, as well as a few things that definitely can’t be claimed for! Most business owners can easily overlook one or more of these areas, so keep this article handy and make sure you’re always holding on to your receipts for your expenditures.

And again, if your expenditure is for something wholly, exclusively and necessary during the everyday running of your business, you can probably claim it as a business expense.

If you’re looking for more advice on how to start your own business, you can download our free startup business guide.

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