Pre-trading expenses: claiming costs incurred before incorporation

Expenditure of a revenue nature incurred wholly and exclusively for the trade in the seven years before trading begins is treated as incurred on day one. Typical examples are market research, domain and website costs, professional fees, software subscriptions, insurance, travel to meet suppliers and initial marketing.

It must be the kind of cost that would be allowable in the ordinary course. Entertaining clients is not allowable before trading any more than it is afterwards.

Before incorporation the company did not exist, so the invoices are usually in your own name. Record them as a director's expense claim, reimburse yourself from the business account, and keep the receipts with the claim.

Reimbursement is not taxable income for you; it is repayment of money you laid out for the business. Where the amount is large, it can instead be credited to your director's loan account and drawn later.

Equipment you already own and bring into the business, such as a laptop or camera, is introduced at market value on the date of introduction, not the price you originally paid. The company can then claim capital allowances on that value.

Document the valuation with a note and a comparable listing. It is a routine point in enquiries because it is easy to overstate.

You can reclaim VAT on services received in the six months before registration and on goods bought in the four years before, provided the goods are still held or were used to make goods still held.

Claim them on the first VAT return, keep the invoices, and expect a check if the first return is a repayment.

Rates, thresholds and deadlines quoted here reflect the 2026/27 UK tax year. Check current GOV.UK guidance, or ask us, before relying on them for your own company.