Recruitment & agency fees

The costs of recruiting staff — job advertising, job board listings, and recruitment agency placement fees — are allowable revenue costs. They are ordinary running costs of building a workforce, not capital expenditure.

Sole traderAllowable

Ltd companyAllowable

EmployeeNot allowable

Conditions

Recruitment and agency fees are allowable costs. GOV.UK's self-employed expenses guidance explicitly lists 'agency fees' as an allowable staff cost (updated November 2024). Advertising a vacancy, paying for a job board listing, and paying a recruitment agency's placement fee are all revenue costs of employing staff.
Recruitment agency placement fees — typically a percentage of the placed employee's first-year salary, invoiced when the candidate starts — are revenue costs in the year they are incurred. They do not create an enduring asset and are not capital expenditure.
Other allowable recruitment costs include: job board advertising (such as industry-specific boards, general platforms, or LinkedIn); costs of producing and distributing recruitment materials; candidate assessment or testing tools; and reference or background check fees.
Where a recruitment agency supplies temporary or contract workers on an ongoing basis — rather than placing a permanent employee for a one-off fee — the regular agency supply charge is also allowable as a staff cost.
For a limited company, recruitment and agency fees are an allowable corporation tax deduction.
Employees cannot claim recruitment costs as their own personal tax deduction — this is an employer cost of building their workforce.

Common mistakes

Overlooking recruitment agency fees in accounts — they can be significant (often 15–25% of a first-year salary) and are straightforwardly allowable in the year paid.
Treating a large agency placement fee as capital expenditure because it secures a long-term hire — it is a revenue cost in the year paid, not capital.
Not obtaining a detailed invoice from the recruitment agency showing the basis of the fee, which is needed to substantiate the expense.

What to keep

Recruitment agency invoices showing the position filled, the fee basis, and the amount charged.
Job board receipts or invoices for advertising spend.
Any contracts with recruitment agencies setting out the fee structure and rebate terms.

Real-world example

A limited company uses a recruitment agency to hire a software developer at a salary of £55,000. The agency charges a placement fee of 20%, invoicing £11,000 when the candidate starts. The £11,000 is an allowable cost in full in the accounting period it is paid — it is a revenue cost of hiring, not capital expenditure. If the developer leaves within the rebate period and the agency refunds £3,000, the net £8,000 is the final allowable cost.

Frequently asked

Is a recruitment agency fee allowable even if the employee leaves after a few months?

Yes — the fee is an allowable revenue cost in the year it was incurred, regardless of how long the employee stays. Many agencies offer a rebate if the employee leaves early; if you receive a rebate, bring it into your accounts as a receipt that reduces the original cost.

Can I claim the cost of job board advertising and LinkedIn ads for recruitment?

Yes. Advertising spend on job boards, sponsored listings, and recruitment campaigns on any platform is an allowable cost, provided it is for business staff recruitment. If a social media account is used for both recruitment and general marketing, apportion the cost appropriately.

Not sure how this applies to you?

The rules shift with your circumstances. A qualified accountant can confirm what you can claim and handle it for you.

Find an accountant

Related allowances

Source: HMRC guidance · Last checked 2026-06-18

This page is general information based on HMRC published guidance, not tax advice. Status shown is a plain-English summary — your own position can differ. Always check the HMRC source above and speak to a qualified accountant before making a claim.