In short: A genuine business cost paid on a personal card can still go into the accounts, but only if your accountant knows about it. Keep the receipt and flag the payment so it is recorded.
Keep all your receipts, personal and business, and hand them over to your accountant.
It sounds counterintuitive to keep personal ones too, but here's why it matters:
Your accountant is the one who determines what actually qualifies as a business expense and gets you tax relief.
Why do business costs end up on a personal card?
The problem is, plenty of genuine business expenses end up paid on a personal card rather than the business one.
HMRC's guidance for limited companies says there must be a clear division between the company's finances and those of the owners and directors, because the company is a separate legal entity, and that the company's banking must be separate from your personal banking. That is the position to aim for.
When a cost has been paid personally anyway, HMRC's guidance gives it a route into the books. Employers do not have to report routine business expenses where they are paying back the employee's actual costs. HMRC's guidance on director's loans says you must keep a record of any money you borrow from or pay into the company, and that an expense repayment is not a director's loan.
What happens if your accountant never sees the receipt?
Without the receipt, your accountant has no way of knowing that cost even happened, let alone that it was for the business.
No receipt means no visibility, and no visibility means you lose the tax relief on a cost you were entitled to claim.
Your accountant can only include what they know about.
If a business expense was paid personally and never flagged, it doesn't make it into your accounts, and without it in your accounts, there's no tax relief on the cost.
HMRC's guidance says a company must keep records of all money spent by the company, and gives receipts, petty cash books, orders and delivery notes as examples. It also says you can hire an accountant, but you are still legally responsible for your company's records and accounts. What evidence HMRC accepts when a receipt is missing is covered in what happens if you lose a receipt.
How do you find business costs in your personal accounts?
If you're not reviewing your personal bank accounts, you're leaving money on the table.
- Identify your biggest business expense categories - software, advertising, travel, whatever they are for your business
- Check your personal bank accounts for any of these costs paid on your personal card rather than the business one
- Tell your accountant about anything you find
A 10-minute scroll through your personal statements once a quarter could easily be the difference between claiming relief you're entitled to and losing it for good.
Finding the payment is half of it. The cost still has to be wholly and exclusively for the business, and a personal cost does not become a business one because a receipt exists. What happens when personal spending ends up in the accounts is covered in personal costs through the business.
Can you still claim after the accounts are filed?
There are time limits. HMRC's guidance says changes to a Company Tax Return must usually be made within 12 months of the filing deadline. After that, if the company has overpaid Corporation Tax, it may still be able to claim it back through overpayment relief.
For a sole trader, HMRC's guidance says you can correct a Self Assessment tax return within 12 months of the Self Assessment deadline. If you miss that, or need to change a return from an earlier tax year, you need to write to HMRC.
For the categories worth checking first, see the expenses checklist.
Record keeping rules and time limits change, and what can be claimed depends on your own facts, so this is general information rather than advice. If your bookkeeping needs a review before the year end, see how we work or talk to us.
Common questions
HMRC's guidance for employers says some routine employee expenses do not have to be reported because they are covered by an exemption. To qualify, the employer must be paying back the employee's actual costs or paying a flat rate that is a benchmark rate or a rate approved by HMRC. See [Expenses and benefits for employers: exemptions and dispensations](https://www.gov.uk/employer-reporting-expenses-benefits/dispensations).
HMRC's guidance says there must be a clear division between the company's finances and those of the owners and directors, and that the company's banking must be separate from your personal banking. It says the simplest way to keep your finances separate is to open a business bank account. See [Company and accounting records](https://www.gov.uk/running-a-limited-company/company-and-accounting-records).
HMRC's guidance says you must usually make any changes within 12 months of the filing deadline. After that, if the company has overpaid Corporation Tax, it may still be able to claim it back, and the guidance points to overpayment relief. See [Company Tax Returns: making changes](https://www.gov.uk/company-tax-returns/making-changes).
HMRC's guidance says you can correct a tax return within 12 months of the Self Assessment deadline, online or by sending another paper return. If you miss the deadline, or need to change a return from an earlier tax year, you need to write to HMRC. See [Self Assessment tax returns: if you need to change your return](https://www.gov.uk/self-assessment-tax-returns/corrections).
Related reading
Simon Jacobs is a Chartered Tax Adviser (CTA · ACA) and PwC trained, founder of SRJ International. He advises UK business owners on tax, profit extraction and exit. Read his full profile →