Staff Costs
Staff salaries & wages
Wages, salaries, and bonuses paid to employees are allowable business costs. The payment must have been actually made, run through PAYE, and be commercially justifiable — salaries paid to family members or connected persons must reflect the market value of the work genuinely done.
Employer's National Insurance
Employer (secondary) National Insurance contributions on employees' wages are an allowable business cost. From 6 April 2025, the employer NIC rate is 15% on earnings above the secondary threshold of £5,000 per year. The Employment Allowance of £10,500 per year reduces the bill for eligible employers.
Subcontractor & freelancer costs
Payments to genuine subcontractors and freelancers for business work are an allowable cost. The key conditions are that the worker must be genuinely self-employed (not a disguised employee), and in construction, the Construction Industry Scheme (CIS) deduction rules must be followed.
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.
Staff training
The cost of work-related training provided to employees is an allowable expense for the employer, and it is exempt from being a taxable benefit in kind for the employee under s250 ITEPA 2003. This entry covers training provided to employees of the business — for the business owner's own training and continuing professional development, see the training-courses entry.