What expenses can I claim through my business?
One of the key benefits of running a business — whether you’re self-employed, a sole trader, or operating a limited company — is the ability to deduct legitimate business expenses from your taxable profit. But what exactly counts as an allowable business expense?
In simple terms, HMRC states that an expense must be “wholly and exclusively” for the purpose of running your business. If a cost has a personal element, it may not be fully claimable or may need to be apportioned.
This guide explains the typical expenses that can be claimed, how they’re treated, and where business owners should exercise caution.
Common Allowable Business Expenses
1. Office Costs
Stationery
Printer ink and paper
Postage
Software subscriptions (e.g. Xero, QuickBooks, Canva, Microsoft 365)
Internet and phone bills (or the business portion if shared with personal use)
2. Professional Fees
Accountant fees
Legal advice related to the business
Consultancy fees
Professional memberships and subscriptions (if relevant to your industry)
3. Travel and Subsistence
Public transport fares (train, bus, taxi) for business trips
Mileage if using your personal vehicle (at HMRC’s approved rates)
Parking fees (excluding fines)
Hotel accommodation for overnight business trips
Meals while travelling for business (but not routine meals during your normal working day)
4. Vehicle Costs (if using a company vehicle)
Fuel
Repairs and servicing
Insurance
Road tax
Breakdown cover
If you use your personal car for business, you typically claim mileage rather than these direct costs.
5. Premises Costs
Rent for business premises
Utility bills (electricity, water, gas)
Business rates
Property insurance
Repairs and maintenance
6. Working from Home (Home Office Expenses)
If you work from home, you can claim either:
Flat rate allowance based on hours worked at home (simpler); or
Proportion of household bills, such as:
Mortgage interest or rent
Electricity and gas
Council tax
Broadband
Water
The proportion is usually calculated based on the number of rooms used for business and how much time is spent working.
7. Staff Costs
Salaries and wages
Employer’s National Insurance
Pension contributions
Staff training (if related to their job)
Recruitment agency fees
Staff welfare — tea, coffee, modest refreshments
8. Marketing and Advertising
Website costs (design, hosting, maintenance)
Online advertising (Google Ads, Facebook Ads)
Business cards, flyers, brochures
Sponsorship (if genuinely for promoting the business)
Social media management tools
9. Training and Development
Courses that maintain or improve existing skills used in your business
Professional development related to your current trade
Note: New qualifications (unrelated to your existing business) may not be allowable.
10. Bank Charges and Interest
Bank fees on business accounts
Credit card fees (if business-related)
Loan interest (if the loan is for the business)
11. Insurance
Professional indemnity insurance
Public liability insurance
Employers’ liability insurance
Business contents or building insurance
12. Bad Debts
Unpaid invoices that are unlikely to be recovered (for accrual-based accounting)
What About Equipment and Assets?
Items like computers, machinery, furniture, and vehicles are considered capital assets, not day-to-day expenses. However, you can claim for them through capital allowances — often using the Annual Investment Allowance (AIA), which lets you deduct the full cost (up to a limit) in the year of purchase.
Partly Business, Partly Personal — How Does That Work?
Some expenses are mixed between personal and business use. In these cases, only the business portion can be claimed. Common examples include:
Phone bills — if 60% of usage is business-related, you claim 60%.
Internet — similarly apportioned if shared.
Vehicle use — claim based on business mileage, not total mileage.
Home office — use a proportion based on space and usage.
It’s important to be reasonable, consistent, and able to justify the split if asked by HMRC.
What Can’t You Claim?
Some costs are explicitly disallowed, even if they feel business-related. These include:
Personal expenses not related to the business
Client entertaining (meals, drinks, hospitality — HMRC doesn’t allow this)
Fines and penalties (e.g., parking tickets, HMRC fines)
Depreciation (capital allowances are used instead)
Clothing — unless it’s a uniform, protective clothing, or costumes (standard workwear like suits is not allowable)
Everyday meals — food and drink during a normal workday at your usual workplace isn’t claimable
Common Grey Areas
Meals and Travel: Routine commuting between home and your regular workplace isn’t claimable. But travelling to a client’s site or a temporary workplace usually is.
Home Office: The rules are generous if done reasonably but require care if claiming mortgage or rent proportions.
Training: If the training is for a new career or trade (not your current business), it’s generally not allowable.
How to Keep Records
To claim expenses, you need to maintain accurate records. This includes:
Receipts and invoices (paper or digital)
Mileage logs for vehicle claims
Copies of bank statements
Records of how you calculate any split for part-business expenses
HMRC requires you to keep records for at least five years after the 31 January submission deadline for that tax year.
Why Getting This Right Matters
Accurately claiming expenses ensures:
You only pay tax on your true profits, not your gross income.
You reduce the risk of HMRC enquiries or penalties.
Your business finances are clearer, helping with better decision-making.
Over-claiming can lead to fines, while under-claiming means paying more tax than necessary.
Final Thoughts
Understanding what expenses you can claim through your business is vital to managing your finances efficiently and ensuring you're paying the right amount of tax — no more, no less. The general rule is simple: if the cost is “wholly and exclusively” for business, it’s usually allowable.
Where things get grey — like mixed-use items or unusual costs — it’s important to apply a reasonable and justifiable approach.
