A regular query from business owners is company expenses, what can/cannot be claimed, and what can be claimed that they might not know about.

To start, for an expense to be allowable for corporation tax purposes, it must be incurred wholly and exclusively for the purpose of trade.

Meaning the expense must be incurred for the purpose of enabling a person to earn profits of the trade.

This definition is not always clear cut therefore we’ve produced the below to provide some guidance on this grey area.

Problem company expenses

Unpaid pension contributions

Unpaid employers pension contributions at the year- end are not allowable for corporation tax purposes.

Accrued salary and employers’ national insurance

Accrued salary which remains unpaid 9 months after the year end is not allowable for corporation tax purposes.  Tax relief is only available in the year the payment is made.

Repairs and renewals

The cost of repairs are usually revenue and allowable for corporation tax.

The same rule applies for the like for like replacement of an item which is a subsidiary part of a larger asset, for example replacing a window.

In the situation where an improvement of the original item has taken place, for example a 2 piece bathroom suite has been upgraded to a 3 piece suite, this is not a revenue repair and should be treated as capital. In this example, the bathroom suite is likely to qualify for capital allowances, so tax relief is still available on the expenditure.

If an asset has been recently purchased and repairs are undertaken to restore the item to a usable condition, these ‘repairs’ will be treated as capital expenditure.


Reasonable staff entertaining is an allowable expense for corporation tax purposes.

Client entertaining is not an allowable expense for corporation tax purposes.


Small donations to local charities are allowable as a trading expense.

Donations to national charities are treated as a charge on income. If the company has taxable profits, a national donation will reduce the taxable profits. However, if the company is in a making loss position, a national donation will not increase the losses. 

Legal and professional fees

Legal and professional fees are not allowable if they have been incurred for a capital purpose or non-trading purpose, for example a company reorganisation or architect’s fees for building work.

A list of allowable potential costs you may incur is detailed below:

Disallowed costs you may incur are as follows:


Parking files for staff who have received a ticket whilst on work duties are allowable for corporation tax purposes.  Parking fines for company Directors are not allowable.

Late submission penalties such as for VAT returns, corporation tax returns and the similar are not allowable for corporation tax purposes.

Need more information?

If you have any questions about company expenses or would like a speak with one of our tax experts call 0161 832 6221 or email one of our tax managers on [email protected].

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