Costs you paid before the company started trading

I spent money before the company traded. Is it lost?

No. Getting a business ready costs money long before the first customer pays you. You buy a domain, pay for a bit of legal advice, take out insurance, sign up to the software you need. All of that happens while the company earns nothing.

The tax rules have a timing fix for this. If your company spent the money for the purposes of the trade within the seven years before trading started, the cost counts as if the company spent it on your very first day of trading. So it goes into your first year's figures instead of falling into a gap.

Seven years is a long runway. For most new companies, everything they spent getting ready sits well inside it.

Which of those costs actually count?

The same ones that would count once you are trading. Moving a cost forward in time does not change what kind of cost it is. If it would not have counted after you started trading, it does not count before either.

The test is whether your company spent the money purely for the business. Our guide on what expenses your company can claim walks through the everyday costs that qualify, and what your company can't claim covers the ones that never cut your tax bill, whenever you paid them. Both apply here without any changes.

One thing to watch: this rule covers money the company spent for the trade. The cost of creating the company itself, the formation fee and the legal work behind it, is normally treated as a one-off cost of building the company rather than a cost of running it, so it does not come off your profit.

What about a laptop or tools I bought before I started?

Equipment goes down its own route. Something you buy to keep and use, like a laptop, a camera or a set of tools, is not an everyday running cost, so it gets relief a different way. The timing works the same though: your company treats it as bought on your first day of trading.

Can I claim my laptop, van or equipment? explains how much of the cost comes off your profit and when. You do not need to do anything different because you bought it early. The seven-year limit further up this page is about everyday running costs. Equipment does not have that cut-off, so an older item you still own and use for the business is worth telling us about.

I paid for it myself. The company had no bank account yet.

This happens to nearly every new director, and it does not stop the claim, as long as the company already existed when you spent the money.

Your company can pay you back for what you spent on its behalf. Until it does, the amount sits on the books as money the company owes you. You are a creditor of your own company, in the same way a supplier would be. When the company has the cash, it repays you, and the debt goes down.

Paying yourself back is not wages and not a dividend. It settles a debt. The one thing that is taxable is interest: if your company pays you interest on top of what you put in, that interest is income in your hands and the company has to hand some of it to HMRC before it reaches you. Most new directors simply charge none.

What's a director's loan, and why does it affect my tax? covers the loan account in both directions, including the charge that bites when the balance runs the other way and you owe the company.

What you do need is proof. Keep the receipt or the invoice, note what it was for, and hang onto it for six years from the end of the accounting period it falls in. If the money left your personal account, the personal bank statement is your evidence. Equipment is the exception: if you expect it to last longer than six years, keep the paperwork for as long as you own it.

A worked example

You set your company up in March 2026 and start trading on 1 June 2026. Before that first sale, you paid for four things out of your own pocket:

All four were spent for the business, all four fall inside the seven years, and all four are the kind of cost you could claim once trading. So your company treats the whole £600 as spent on 1 June 2026, and it comes off your first year's profit. At the 19% rate that smaller-profit companies pay, that saves you £114 in Corporation Tax. A company making bigger profits pays a higher rate, so the same £600 would save it a little more.

You also bought a £600 laptop in April. That one is equipment, so it goes down the equipment route rather than sitting in the £600 above, and it counts from 1 June too.

How SimpleReturns handles it

Tell us when your company started trading and add the early costs you paid, including the ones that left your personal account. We put them in the right year, split the equipment away from the running costs, and show you every figure before anything goes to HMRC.