The most common example of this expense is client entertaining where you can still record them but it won’t reduce your tax bill and VAT isn’t recouped.
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The HMRC rule is clear on this a business expense must be necessary and that is wholly and exclusively incurred as part of the day to day running of your business.
![business expenses business expenses](https://www.theaccountancy.co.uk/wp-content/uploads/2021/04/A-Guide-to-Business-Expenses.png)
In its simplest terms, you should be looking to record any expense, paid by the business, by you, or by your employees that is for physical items or services needed to run the business. By understanding the HMRC rules and following some simple guidelines, you can ensure that you maximise the tax benefits and improve your balance sheet, quickly and efficiently. Many freelancers, contractors and small businesses see claiming business expenses as an onerous task, but it doesn’t need to be. In this guide, you’ll learn what expenses are and what you can claim through your company.
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Managing expenses is an important part of running a limited company.