Allowable business expenses: what you can claim

The golden rule

To be allowable, an expense generally has to be incurred "wholly and exclusively" for your business. If something is part business, part personal — like a phone or your car — you can usually claim the business proportion, as long as you can justify how you worked it out.

Common allowable expenses

Depending on your trade, these typically qualify:

• Stock, raw materials and direct costs of what you sell
• Staff wages, subcontractor costs and pension contributions
• Premises costs — rent, business rates, utilities, insurance
• Travel and motoring for business (mileage or actual costs)
• Phone, internet, software and other tools of the trade
• Professional fees — including accountancy
• Marketing, advertising and website costs
• Training that maintains or updates your existing skills

Working from home

If you run your business from home, you can claim a proportion of costs like heating, electricity, broadband and council tax — based on the rooms used and time spent — or use HMRC's simplified flat-rate amounts. We'll help you pick whichever gives the better result.

What you can't claim

• Anything purely personal, or the personal share of a mixed cost
• Client entertaining (not allowable for tax)
• Most everyday clothing, even if you only wear it for work (uniforms and protective gear are fine)
• Fines and penalties, such as parking or speeding fines
• The full cost of capital items in one go — these are usually handled through capital allowances instead

Keep the records

Whatever you claim, keep the evidence: receipts, invoices and a clear note of anything part-personal. With Making Tax Digital, keeping digital records is becoming the norm anyway — and good records mean you never miss a claim or panic at year-end.

The biggest cost we see isn't over-claiming — it's people under-claiming because they don't realise what's allowable. Part of our job is making sure you claim everything you're entitled to. See our bookkeeping and tax advice services, or ask us what applies to your trade.