Keeping track of all your business expenses will allow you to offset the cost of business essentials against your Corporation Tax bill, so you can save a little money while you spend it.
When you put an expense through the business, as long as it is an ‘allowable’ expense, you can offset 20% of the expense against your Corporation Tax. In essence, your Corporation Tax bill will be reduced by an amount that is equivalent to 20% of the expense.
For example, if you incur a business expense of £100, your Corporation Tax bill will be reduced by £20.
The Corporation Tax deduction is not applied until the end of your Corporation Tax period so you may have to wait a number of months before you can realise the benefit.
However, not all business expenses are what is termed ‘allowable’ or ‘deductible’. A business expense is any expenditure that is “a wholly, exclusively and necessary expense” incurred by the business for its performance of day-to-day duties.
See the list of what can be claimed here.