1. Common allowable expense categories
HMRC lists a range of costs that can be deductible when they are incurred for the business and meet the relevant rules.
Office and communications
Stationery, phone bills and other qualifying office costs used for the business.
Travel
Qualifying business travel such as public transport, parking and business mileage. Ordinary commuting is not automatically deductible.
Staff and subcontractors
Wages, subcontractor costs and other qualifying staff costs.
Premises
Business rent, utilities, business rates and other qualifying premises costs.
Insurance and finance
Business insurance, bank charges and certain finance costs.
Marketing
Advertising, website costs and other qualifying promotional spend.
Training
Training related to the business, including qualifying refresher or skills-maintenance courses.
Professional fees
Qualifying accountancy, legal and professional fees incurred for business purposes.
2. Costs used for business and personal purposes
If a cost has both business and personal use, you can normally claim only the business element. The split should be reasonable and supported by the facts.
The same principle can apply to internet costs, vehicles and other mixed-use items, although the detailed tax treatment varies by category.
3. Working from home
You may be able to claim a reasonable proportion of household costs such as heating, electricity, Council Tax, rent or mortgage interest, internet and telephone use where they relate to the business.
HMRC also provides simplified expense rules for certain costs, including working from home. The best method depends on your facts and record keeping.
4. Equipment, machinery and vehicles
The treatment depends on what you buy and which accounting basis you use. Under traditional accounting, capital allowances can apply to qualifying equipment, machinery and business vehicles. Under cash basis, many items bought and kept for the business are normally dealt with as expenses, with special treatment for cars.
Do not assume every large purchase is immediately deductible in full. The rules for cars, mixed use and capital items can differ.
5. The £1,000 trading allowance
The trading allowance can exempt up to £1,000 of gross trading income in some circumstances or be used as a deduction instead of actual expenses. If your gross trading income is no more than £1,000, you may not need to tell HMRC about it, although exceptions apply.
If you elect to use the trading allowance against trading income, you cannot also deduct actual business expenses or capital allowances against that same income.
6. Keep evidence that supports the claim
Keep records of business income and expenses so you can support the figures used in your tax return. Useful records can include bank statements, invoices, receipts, mileage records and calculations showing how mixed-use costs were split.
Experlu has a fixed-price bookkeeping catch-up service for jobs within its stated scope.
Frequently asked questions
Can I claim every payment made from my business bank account?
No. The tax treatment depends on what the cost is for, not which account paid it. Personal costs are not allowable business expenses.
Can I claim my mobile phone?
You can normally claim the business proportion of a mixed-use phone cost. A reasonable split is needed where there is personal use.
Can I claim for working from home?
You may be able to claim a reasonable business proportion of household costs or use simplified expenses where the rules allow.
Can I claim a laptop or equipment?
The treatment depends on your accounting method and the asset. Some equipment can be claimed as an expense under cash basis, while capital allowances can apply in other cases.
Can I claim the cost of preparing my Self Assessment return?
HMRC says the cost of preparing and submitting your personal Self Assessment tax return is not an allowable business expense, although qualifying accountancy fees for business work can be deductible.
Can I use the trading allowance instead of expenses?
Yes, where eligible. But if you use the £1,000 trading allowance against that income, you cannot also deduct actual expenses from the same trading income.
Once your records and expenses are in order, a vetted UK accountant can prepare and file your return for a fixed price.
This guide is general information, not personal tax advice. Expense treatment depends on the nature and purpose of the cost and your accounting method.