Credit card fees & interest

Conditions

• Credit card charges are explicitly listed as an allowable financial cost in GOV.UK's self-employed expenses guidance (updated November 2024): 'bank, overdraft and credit card charges.' This covers annual card fees, interest on a balance carried from business spending, and late payment or cash advance fees where the card is used for business.
• The card must be used for business. Where a card is used entirely for business expenditure, all related charges and interest are allowable. Where the same card carries a mix of business and personal spending, only the proportion of the annual fee and interest that relates to business transactions is deductible. In practice this means apportioning by the ratio of business to total spend, and keeping statements that allow the calculation to be reconstructed.
• For a limited company, a company credit card used by directors or employees for business expenses incurs charges that are an allowable corporation tax deduction. If the company reimburses or pays charges on a director's personal credit card used for business, the position requires care — the business element is allowable but any personal element could give rise to a benefit in kind.
• Employees cannot claim credit card charges or interest as a personal tax deduction, even where the card is used for work expenses. The employer should reimburse the business spending itself; charges and interest on a personal card remain the employee's own cost.

Common mistakes

• Claiming the full annual fee and all interest on a personal credit card that is also used for private spending, without restricting to the business proportion.
• Claiming the repayment of the credit card balance itself as an expense — only the interest and card charges are deductible, not the repayment of the underlying spending.
• Forgetting that where a company pays charges on a director's personal card, there may be a benefit-in-kind consideration if any of the spending is personal.

What to keep

• Credit card statements showing charges, interest, and the individual transactions — these allow the split between business and personal spending to be evidenced.
• Where a card is used for mixed spending, a written note of the basis for the business proportion claimed, with the calculation.

Real-world example

A sole trader uses a dedicated business credit card to purchase materials and pay for subscriptions. The card charges a £60 annual fee and he carries a balance between statements, incurring £140 in interest over the year. Both are allowable in full since the card is used solely for business.

Frequently asked

Related allowances