Tax-saving tips for limited company directors
Running a limited company comes with plenty of responsibilities, but it also offers opportunities to reduce your tax bill legally. The key is understanding what your company can pay for, what expenses are tax-deductible, and how to stay compliant with HMRC's rules.
Many directors miss out on valuable tax savings simply because they don't realise what's available or assume claiming expenses is more complicated than it really is. With a little planning and good record-keeping, you can make your business work more tax efficiently while avoiding unexpected tax bills.
In this blog, we'll explain some of the most effective tax-saving opportunities for limited company directors during the 2026/27 tax year. We've tried to keep everything simple, so you don't need to be a tax expert to understand it. (But always feel free to reach out if it doesn’t as that’s what we are here for!)
1. Claim for working from home
If you regularly work from home because your company doesn't provide you with a permanent workplace, your company may be able to contribute towards the additional household costs you incur.
The simplest option is for your company to pay you £6 per week (£312 per year) without requiring detailed records of your household bills. This flat-rate payment is designed to help cover additional costs such as heating, electricity and water that arise from working at home.
If your actual additional costs are higher, you may be able to claim more, but you'll need to calculate the business proportion and keep evidence to support your claim. For most directors, the flat-rate method is the easiest and lowest-maintenance option.
Top tip: Keep a note of the days you work from home, even if you're using the flat-rate allowance. Good records are always worthwhile if HMRC ever asks questions.
2. Let your company pay for your mobile phone
If you use your mobile phone for business, there can be significant tax advantages if your company provides it.
To qualify for the tax exemption:
- The mobile phone contract must be in the company's name.
- The company must provide the phone.
- The phone should be provided primarily for business use.
Occasional personal use is usually acceptable and won't normally create a tax charge, provided the phone wasn't supplied mainly for personal reasons.
If your mobile phone contract is in your own name and your company simply reimburses the monthly bill, different tax rules can apply, and the reimbursement may become taxable.
3. Can you claim broadband?
Broadband is one of the areas that often causes confusion.
If you already had a home broadband connection before you started working from home, HMRC generally considers this to be a personal expense. As there is no additional cost created by business use, your company can't usually reimburse your home broadband bill tax-free.
However, broadband costs may be allowable where:
- the broadband contract is taken out in the company's name specifically for business use; or
- a new broadband connection is installed because it's needed for your work.
Where private use is insignificant, these costs can often be met by the company without creating a taxable benefit.
For many directors, claiming the £6 weekly homeworking allowance while keeping business contracts in the company's name is the simplest approach.
4. Make the most of trivial benefits
A trivial benefit is a small gift or perk your company can provide without creating a tax charge, provided certain conditions are met.
To qualify, the benefit must:
- cost £50 or less (including VAT);
- not be cash or a cash voucher;
- not be given as a reward for work or performance; and
- not form part of your employment contract.
Examples include:
- flowers
- chocolates
- a bottle of wine
- afternoon tea
- a meal out
- a beauty treatment
- cinema tickets
If you're a director of a close company (which includes most owner-managed limited companies), the total value of trivial benefits is generally limited to £300 per tax year.
Small gestures like these can be a tax-efficient way to enjoy company-funded treats while staying within HMRC's rules.
5. Invest in your skills with training and CPD
Learning new skills can benefit both you and your business, and in many cases your company can pay for the cost.
If the training helps you improve or maintain the skills you already use in your current role, it's usually an allowable business expense. This means your company can claim tax relief on the cost, and you won't normally pay Income Tax or National Insurance on the benefit.
Examples include:
- Continuing Professional Development (CPD)
- Industry conferences and seminars
- Webinars
- Professional qualifications needed for your current role
- Health and safety training
- Software training
- Business coaching that's directly related to your existing business
However, if the course is designed to help you start an entirely new trade or business, HMRC is unlikely to allow the cost as a business expense.
Example: If you're a marketing consultant taking an advanced digital marketing course, this would usually qualify. If you're training to become an electrician while running a marketing business, it generally wouldn't.
6. Claim professional subscriptions
Many directors pay for memberships that help them stay up to date in their profession.
Your limited company can usually pay for these subscriptions, provided:
- they're relevant to your job or business; and
- the organisation appears on HMRC's approved list of professional bodies.
Common examples include:
- ACCA
- ICAEW
- AAT
- CIPD
- CIOT
- Industry trade associations
- Chambers of Commerce memberships (where appropriate)
If the subscription qualifies, your company can claim it as a business expense without creating a taxable benefit.
Top tip: If you're unsure whether your membership qualifies, it's worth checking HMRC's approved list before claiming.
7. Hold an annual staff event
Did you know your company can pay for an annual staff event, such as a Christmas party or summer BBQ?
Provided certain conditions are met, the cost can be completely tax-free.
The main rules are:
- It must be an annual event.
- It must be open to all employees (or all employees at one location if your business has multiple sites).
- The total cost must not exceed £150 per person, including VAT and any transport or accommodation provided.
It's important to remember that this isn't an allowance—it's an exemption.
If the total cost comes to £151 per person, the entire amount becomes taxable, not just the £1 over the limit.
The £150 limit also includes directors and their guests, making it a great way for owner-managed businesses to celebrate a successful year.
8. Claim business mileage correctly
If you use your own car or van for business journeys, your company can reimburse you using HMRC's approved mileage rates.
These rates are designed to cover fuel, servicing, insurance, repairs and general wear and tear, so you can't usually claim those costs separately.
For the 2026/27 tax year, HMRC's approved rates are:
- 55p per mile for the first 10,000 business miles
- 25p per mile for each business mile after that
Business journeys include trips such as:
- Visiting clients.
- Travelling to temporary workplaces.
- Attending networking events.
- Going to business meetings or training courses.
They don't include ordinary commuting between your home and your normal place of work.
To support your claim, keep a mileage log that records:
- The date of each journey.
- Where you travelled to and from.
- The reason for the journey.
- The number of business miles travelled.
Many mileage tracking apps can make this much easier and help ensure your records are accurate.
9. Pay into your pension through your company
Making employer pension contributions is often one of the most tax-efficient ways to take money from your limited company.
Instead of paying yourself extra salary or dividends, your company can contribute directly into your pension.
In many cases this means:
- The company receives Corporation Tax relief on the contribution.
- No employer National Insurance is payable.
- No employee National Insurance is payable.
- The contribution doesn't usually count as taxable income for you personally.
Most people can contribute up to the annual pension allowance each tax year, although the exact amount can be affected by factors such as your income, pension history and whether the tapered annual allowance applies.
Because pension rules can be complex, it's worth taking professional advice if you're planning to make larger contributions.
Top tip: Employer pension contributions can be a great way to reduce your company's taxable profits while investing in your future.
10. Claim business travel and meals
You can't usually claim the cost of your everyday lunch while working from your normal place of work.
However, if you're travelling for business or working at a temporary workplace, food and drink may be an allowable business expense.
Common examples include:
- Attending a conference.
- Visiting a temporary workplace.
- Travelling for work away from your usual location.
- Overnight business trips.
The key rule is that the expense must be incurred wholly and exclusively for business purposes.
Keeping receipts and noting why the expense was incurred will help support your claim if HMRC ever asks for evidence.
11. Eye tests and glasses
If you or your employees regularly use display screen equipment (such as computers or laptops) your company can pay for eye tests.
Where an eye test shows that special glasses or contact lenses are needed specifically for screen work, these may also qualify for tax relief.
However, ordinary prescription glasses that you would need regardless of computer use aren't usually covered by the exemption.
This is a simple but often overlooked benefit that helps support employee wellbeing while remaining tax efficient.
12. Health screening and medical check-ups
Looking after your health is just as important as looking after your finances.
Your company can usually provide:
- One health screening assessment each tax year; or
- One medical check-up each tax year
without creating a taxable benefit, provided HMRC's conditions are met.
These preventative health checks can help identify potential health issues early while giving directors and employees valuable peace of mind.
Year-end tax planning: don't leave it until the last minute
Good tax planning isn't about rushing to buy things before your year-end. It's about reviewing your finances early, making informed decisions and ensuring you're making the most of the tax reliefs available to your business.
Here are some of the key areas to review before your company's financial year ends.
Buy equipment your business genuinely needs
If you've been planning to replace your laptop, upgrade your software or invest in new tools or equipment, buying them before your year-end could bring forward your tax relief.
Many business assets qualify for tax relief, helping to reduce your company's taxable profits.
Examples include:
- Laptops and computers
- Office furniture
- Specialist tools and equipment
- Business software
- Mobile phones
- Printers and office equipment
The important thing is that the purchase is genuinely for business use. Buying something simply to reduce your tax bill rarely makes financial sense if you don't actually need it.
Review your Director's Loan Account
A Director's Loan Account (DLA) keeps track of money you've borrowed from, or paid into, your company that's separate from your salary, dividends or expenses.
If you've taken more money out of the company than you've put in, your loan account may be overdrawn.
Depending on the balance and when it's repaid, this can create additional tax charges for the company and, in some cases, a taxable benefit for you personally.
Reviewing your Director's Loan Account before your year-end gives you time to explore the most tax-efficient way to deal with any outstanding balance.
Could you employ a family member?
If your spouse, civil partner or another family member genuinely works in your business, employing them could be a tax-efficient option.
Typical duties might include:
- Administration
- Answering calls
- Managing social media
- Packing orders
- Customer service
To keep everything compliant:
- They must carry out real work.
- Their pay must be reasonable for the work they do.
- Payroll rules must be followed, including PAYE where required.
- Keep records of the work completed.
Done correctly, employing family members can reduce your company's taxable profits while making use of personal tax allowances.
Check for expenses you've not yet claimed
Before your year-end, it's worth reviewing whether there are any legitimate business expenses that haven't yet been recorded.
These might include:
- Professional fees
- Software subscriptions
- Business insurance
- Training costs
- Telephone bills
- Mileage claims
- Business travel
Making sure everything is recorded accurately helps ensure your accounts reflect the true cost of running your business.
Think ahead with pension contributions
If your company has had a profitable year, making an employer pension contribution before your year-end could reduce your Corporation Tax bill while boosting your retirement savings.
Because pension rules can be complex, it's best to plan ahead rather than waiting until the final few days before your accounts are prepared.
Common mistakes directors make
We regularly speak to directors who are unknowingly paying more tax than they need to.
Some of the most common mistakes include:
- Missing deadlines for claiming expenses.
- Mixing personal and business spending.
- Not keeping receipts or mileage records.
- Forgetting to review their Director's Loan Account.
- Assuming every business purchase is automatically tax deductible.
- Paying for personal costs through the company without checking the tax implications.
- Waiting until the last minute to think about tax planning.
Good bookkeeping throughout the year makes tax planning much easier and helps avoid costly surprises.
Frequently asked questions
Can my limited company pay for my home internet?
Sometimes. If it's a separate business contract in the company's name, it may qualify. If it's your existing personal broadband, the rules are much more restrictive.
Can my company buy me a laptop?
Yes, if it's needed for your business. Business equipment is often an allowable company expense.
What's the easiest tax-saving tip for directors?
For many owner-managed businesses, making employer pension contributions, claiming legitimate business expenses and keeping accurate records offer some of the biggest long-term tax savings.
Can I buy gifts through my company?
Small gifts may qualify under HMRC's trivial benefits rules, provided the conditions are met.
Do I need to keep receipts?
Yes. Good record-keeping is one of the simplest ways to protect yourself if HMRC ever asks to see evidence of your claims.
Final thoughts
Tax planning shouldn't be something you only think about a few weeks before your year-end. The best results usually come from reviewing your finances throughout the year and making small, informed decisions as your business grows.
Every company is different, and what works well for one director may not be the most tax-efficient option for another. That's why tailored advice is so valuable.
Whether you're a new limited company director or you've been running your business for years, taking the time to understand the rules can help you keep more of your hard-earned profits while staying fully compliant with HMRC.
Need help with your limited company tax planning?
At SOS Accounting we help limited company directors across the UK understand their finances, reduce unnecessary tax and stay compliant with HMRC.
If you're unsure what your company can claim, want to plan ahead for your next year-end or simply need straightforward advice, we'd be happy to help.
Get in touch with SOS Accounting today to arrange a friendly, no-obligation chat and let's make sure you're making the most of every tax-saving opportunity available.