Personal Incidental Expenses

The question of expenses can be intricate. Different types of expenses have particular taxation implications. In general, expenditure that is incurred wholly and exclusively for the purposes of business is allowable for Corporation Tax. These expenses are deducted from your company’s income and have the effect of reducing taxable profits, thereby reducing the overall amount of tax payable.

Although expenditure may be incurred by the business, there may be an element of benefit to you, the company director. This will have personal taxation implications as these items are considered by the Inland Revenue to be a Benefit in Kind.

Examples of Allowable Expenditure may include the following items.

National insurance contributions can be avoided on personal expenses, if the expense is incurred in the name of your company and not you the individual. However, any personal expenses that the company either pays for directly or reimburses you for will be treated as a benefit in kind. This expenditure will then be liable to National Insurance contributions. VAT registered businesses can reclaim VAT on any expenses, providing the invoice for the expense or contract entered into is in the company name and not the name of the individual director.

Personal Incidental Expenses

If you need to stay away from home overnight on company business whilst fulfilling your employment, your company can pay you free from tax and national insurance contributions an allowance in respect of personal expenses such as newspapers and telephone calls.

Personal Incidental Expenses (PIES) may be claimed at the rate of £5 per day, and is intended to cover laundry costs, private telephone calls and newspapers in respect of incidental costs incurred when you are working away from home and spend the night either in rented or hotel accommodation. This sum must be paid to you by your employer. The rate is increased to £10 for short periods overseas, and payments in excess of these limits are taxable.


Entertainment is not allowable as a tax-deductible expense, except that is for £75 per head for each of your employees is allowable for a Christmas party or other annual celebration. If you reimburse yourself for entertainment this will be treated as a benefit in kind and will have personal taxation implications.