Recruitment & agency fees
Last checked 21 October 2026 · HMRC source
Recruitment agency fees are on GOV.UK's list of staff costs a self-employed business can claim, and for a sole trader or a limited company, job adverts and placement fees for a role in the business are judged on the wholly and exclusively test. Employees have no specific relief for recruitment costs.
Conditions
- GOV.UK's self-employed expenses guidance lists agency fees among the staff costs you can claim, alongside employee and staff salaries.
- The test for both sole traders and companies is statutory: section 34 ITTOIA 2005 for unincorporated businesses and section 54 CTA 2009 for companies prevent a deduction unless the expenditure is incurred wholly and exclusively for the purposes of the trade (BIM37007). Job adverts, job-board listings and placement fees paid to fill a role in the business are judged on that test.
- The test is about purpose. HMRC says it is only satisfied if the sole purpose of the expense is the trade, and that if one of the reasons for it is not for business purposes, the expenditure fails (BIM37007). A cost that serves two business purposes at once — a campaign that both recruits and markets the business — is not caught by that.
- Ongoing charges from an agency that supplies temporary or contract workers are agency fees too. Where a worker is supplied through their own intermediary, such as a limited company, the off-payroll working rules can give the client and the agency responsibilities of their own — see subcontractor and freelancer costs.
- This page does not cover recruitment costs incurred as part of buying or starting a business; ask an accountant about those.
- Employees have no specific relief for recruitment costs. GOV.UK's employee guidance names no route for them among the things an employee can claim for, and an employee's general deduction is under section 336 ITEPA 2003, which HMRC calls very restrictive: all of its tests must be passed (EIM31630).
Common mistakes
- Claiming a recruitment cost that is not for the business. GOV.UK states you cannot claim for carers or domestic help, for example nannies, so an agency fee to hire a nanny is not a business staff cost.
- 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's fee is 20% of the first-year salary, so it invoices £11,000 when the candidate starts. The fee is incurred to fill a role in the company's trade, which is what the section 54 CTA 2009 wholly and exclusively test looks at (BIM37007). A sole trader hiring the same developer is in the same position under section 34 ITTOIA 2005, and GOV.UK lists agency fees among the staff costs a self-employed business can claim.
Frequently asked
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Every figure, rule and status on this page traces to these GOV.UK and legislation.gov.uk pages, all read on 21 October 2026.
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