---
title: What expenses reduce your Corporation Tax bill
description: What expenses reduce your Corporation Tax bill
---

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# What expenses reduce your Corporation Tax bill

## Common allowable expenses and those that aren’t allowed

Allowable business expenses are deducted from your income to calculate taxable profit. The lower your taxable profit, the less Corporation Tax you pay.

### Common allowable expenses

- Salaries and employer National Insurance contributions (including your director's salary)
- Employer pension contributions
- Office rent, utilities, and business rates
- Professional fees (accountancy, legal)
- Software subscriptions and IT equipment
- Marketing and advertising costs
- Business travel and accommodation
- Training and professional development directly related to the trade

### Not allowable

- Client entertainment (blocked for both VAT and Corporation Tax)
- Fines and penalties
- Personal expenses paid through the company
- Depreciation (replaced by capital allowances)

💡 **Good to know:** A director's salary is fully deductible. This is one reason why taking a salary (rather than all dividends) reduces the Corporation Tax bill. A £12,570 salary saves approximately £2,388 in Corporation Tax at the small profits rate.

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