Have you ever asked your accountant, “Can I put this through as a business expense?”

This is a question our accountants hear daily, and we’re not annoyed by it!

We’d rather business owners ask what they can and can’t claim than face issues later.

Why does putting expenses through a business matter?

Putting expenses through a business is essential for several reasons, mainly for tax efficiency, accurate financial reporting, and legal compliance.

Correctly classifying and recording business expenses (costs incurred “entirely and solely” for business purposes) helps ensure the business operates professionally and within the law.

These expenses can be categorised into three simple categories: gold, silver, and bronze.

Now, let’s consider what each category means.

Gold: Fully Allowable Business Expenses

These expenses are the real winners!

The costs are purely for business purposes, so when you incur these expenses through the company, you can usually recover VAT (if VAT-registered) and lower your corporation tax.

Example of Fully Allowable Expenses

For instance, on a £60 phone contract, you might save £10 VAT and £12.50 in corporation tax, making your actual cost for the contract just £37.50 – a great example of how claiming the right expenses can help your money go further.

Other gold-level expenses could include:

• Software subscriptions and online tools
• Office supplies
• Professional fees (such as accountants or solicitors)
• Advertising and Marketing
• Travel and mileage for business purposes

If it’s essential for running your business, there’s a good chance it belongs in this category.

Silver: Allowable Expenses (But Not for Corporation Tax)

These costs are still business-related and can go through your company.

While you won’t receive the corporation tax deduction, you avoid withdrawing the money personally and paying additional income tax.

For example, client entertaining allows you to pay for a client lunch or event via the business, but HMRC won’t let you deduct this cost from your taxable profits.

The benefit is that the money comes from the business funds, not your personal account, so you don’t pay income tax to extract the money from the business to then purchase the item.

Example of Allowable Expenses

• Networking events
• Gifts to clients
• Hospitality
• Certain staff social events (depending on circumstances)
• Subscriptions or memberships that aren’t fully business-related

So, although silver expenses don’t provide the full tax savings like gold, they are still worthwhile to process through the company to avoid paying from your personal account.

Bronze: Non-Business (Personal) Expenses

Finally, we have the bronze category, which are costs that shouldn’t go through the business at all.

The costs are anything personal in nature, even if it’s loosely connected to the business.

Example of Non-Business Expenses

• Personal food or clothing
• Family holidays
• Your personal mobile or Netflix subscription

If these expenses end up in your company accounts, your accountant should move them to your Director’s Loan Account (DLA).

This means you’ll likely need to take a salary or dividend to repay the amount, and that triggers personal tax.

So, whilst it might be tempting to “just put it through the business” for convenience, it can cost you more in personal tax in the long run if it’s not genuinely business-related.

Which examples should you claim?

In short: gold expenses save you tax, silver expenses are allowable but don’t reduce your profits, and bronze expenses should stay personal.

Knowing the difference helps you remain compliant and keep more of your profits in your pocket.

If you’re ever unsure whether something qualifies as a business expense, don’t guess - ask your accountant. It’s always better to check than to find out at the end of the year that something shouldn’t have gone through.

At Gravitate Accounting, we help our clients stay proactive, informed, and tax-efficient, so they can focus on growing their business without worrying about the paperwork.

If you are searching for clarity on what you can claim, contact our team today!

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