What Can I Claim as a Business Expense?

Whether you're a construction contractor, café owner, hairdresser, freelancer, or retail shop owner—understanding what you can claim as a business expense is one of the most powerful ways to reduce your tax bill.

The difference between claiming everything you're entitled to and claiming nothing could be thousands of pounds in your pocket every year. Yet many small business owners either claim too little out of caution, or claim things that HMRC will challenge.

This guide cuts through the confusion. We'll walk you through the golden rule of business expenses, show you exactly what every business can claim, explore industry-specific deductions, and give you an interactive tool to check whether a specific expense is claimable.

By the end, you'll know the difference between a legitimate business expense and a personal cost—and you'll be confident you're claiming every penny you're entitled to.

The Golden Rule: "Wholly and Exclusively"

Before we list a single expense, you need to understand the rule that governs EVERYTHING you claim. It's simple, but it's the key to getting it right.

Notice the word "exclusively." This is crucial. It means:

• You can't claim expenses that serve both business and personal purposes. For example, a suit you wear to client meetings AND social events. That's dual-purpose, so it's not allowable.
• You can claim something proportionally if it's part of a larger business expense. For example, your home internet bill—you can claim the business percentage, not the whole thing.
• Some things feel like business but aren't. A haircut so you look professional? Personal. Gym membership to stay healthy for your job? Personal. These don't pass the test because they benefit you personally, even though you feel they help your business.

Keep this rule in mind as you read the rest of this guide. When in doubt, ask yourself: "Is this expense only for the business, with no personal element?" If the answer is yes, it's likely claimable. If there's any personal benefit, you'll need to split the cost or skip it.

Universal Business Expenses (Every Business Can Claim These)

Regardless of what type of business you run, these expenses are generally allowable and HMRC regularly sees them claimed:

Phone and Internet

If you use your personal phone or broadband for business, you can claim a percentage. The key is to estimate the percentage of time you use it for business:

• Phone: If 60% of your calls are business-related, claim 60% of your monthly bill (don't forget standing charges)
• Broadband: Estimate the business percentage and claim that portion
• Mobile phone contract: Business portion of calls, data, and line rental
• Dedicated business phone: Fully claimable

Accounting Fees and Professional Advice

Fully claimable, including:

• Accountancy and bookkeeping fees
• Tax return preparation
• Business advice from solicitors or consultants
• Payroll services
• This is one expense that pays for itself by ensuring you claim everything else correctly!

Bank Charges and Interest

• Business account fees
• Transaction charges
• Interest on business loans (though capital repayments aren't deductible)
• Overdraft charges

Business Insurance

Fully claimable:

• Liability insurance
• Professional indemnity insurance
• Contents insurance for stock or equipment
• Cyber insurance
• Public liability insurance
• Note: Personal car insurance is NOT claimable, but business car insurance is (see Vehicle Expenses below)

Software and Subscriptions

• Cloud software (Xero, FreshBooks, etc.)
• Project management tools (Asana, Monday, etc.)
• Design tools (Canva, Adobe Creative Cloud)
• Email marketing platforms
• CRM systems
• Antivirus and security software
• Productivity apps and plugins

Office Supplies and Stationery

• Paper, pens, notebooks
• Printer ink and cartridges
• Folders and filing systems
• Sticky notes, labels, envelopes
• Low-value items like desk accessories

Advertising and Marketing

• Social media advertising
• Google Ads
• Website hosting and domain names
• Business cards
• Leaflets and flyers
• Signage
• Sponsorships and local advertising

Utilities (Partially, If Working from Home)

See the Working from Home section below for how to claim a portion of these.

Subscriptions and Memberships

• Industry membership fees (e.g., professional bodies)
• Trade association memberships
• Business networking group fees
• Important: Social club memberships and hobby groups are NOT claimable

Vehicle and Travel Expenses

Travel for business is claimable, but there are clear rules about what counts and what doesn't.

Mileage and Vehicle Costs

The Mileage Method (Recommended for Most)

Instead of tracking every fuel receipt and service bill, you can use HMRC's approved mileage rates. This is simpler and often gives you a better deduction:

Vehicle Type	Rate per Mile
Car or van (first 10,000 miles)	45p
Car or van (over 10,000 miles)	25p
Motorcycle	24p
Bicycle	20p

Simply record every business journey (where you went, when, and the business purpose), multiply the miles by the rate, and you have your deduction. No receipts needed—though HMRC may ask how you've calculated your mileage.

The Actual Expenses Method

You can instead claim actual costs: fuel, maintenance, insurance, breakdown cover, vehicle tax, and depreciation. This requires detailed records but may work better if you have high running costs.

Important: Commuting from home to your main office is NOT business mileage—it's a personal journey. But if you're visiting clients, suppliers, or different work locations, that IS claimable.

Public Transport

• Taxis for business journeys (keep receipts)
• Train and bus tickets for business travel
• Parking fees
• Tolls and congestion charges

Overnight Accommodation and Subsistence

• Hotels for business trips
• Meals during overnight stays (reasonable costs)
• Train and flight costs

Note: Daily meals while you're at home or your regular workplace are personal expenses, not deductible. Only meals during business trips count.

Working from Home Allowance

Many small business owners work from home—whether it's a freelancer in a spare bedroom or a tradesperson using a desk to manage jobs. HMRC recognises this and allows two methods to claim:

Method 1: The Simplified Allowance

From April 2024, you can claim a flat rate based on the hours worked from home:

• Fewer than 25 hours per week: £110 per month
• 25 to 50 hours per week: £220 per month
• Over 50 hours per week: £315 per month

This covers heating, lighting, internet (partial), and general use of your home. No detailed calculations needed—just check you qualify and claim the monthly amount.

Method 2: The Detailed Calculation

Claim actual costs based on the percentage of your home used for business:

1. Calculate the business percentage: If you have a dedicated office room, use 1 room ÷ total rooms. If you use the spare bedroom 50% of the week, use 50%.
2. Claim proportional costs:
   • Rent or mortgage (only if you truly have a dedicated office—usually not allowed)
   • Council tax (proportional share—but often only for dedicated rooms)
   • Water and heating
   • Electricity
   • Broadband (business portion)
   • Home insurance (additional premium for business use)

Example: Your home has 4 rooms and you use one as a dedicated office. Electricity bill is £100/month. You could claim 25% = £25/month. Broadband is £50/month; you estimate 70% is business use, so you claim £35.

Most people find the simplified allowance easier and sufficient. Choose whichever gives you the better result—you can change methods year to year.

Industry-Specific Expenses

Beyond universal expenses, different businesses have unique costs. Below we've detailed common expenses for major small business types. Find your industry and see what you can claim:

Capital Allowances: Equipment and Assets

Some business expenses are too significant to claim in one year. These "capital" items are spread over several years through capital allowances. Here's how it works:

What Qualifies for Capital Allowances?

Items that cost over £500-600 and are expected to last more than a year:

• Vehicles: Vans, cars (though restricted), plant machinery
• Equipment: Large tools, machinery, cooking equipment, salon furniture
• Computers and tech: Servers, expensive laptops (though often under £500), hardware
• Building improvements: Fitted kitchens, bathrooms, fixtures (with exceptions)
• Furniture: Office furniture, shelving systems

Annual Investment Allowance (AIA)

The AIA is the simplified way to claim capital allowances. In 2026, you can claim up to £1,000,000 per year on qualifying plant and machinery. This means:

• If you buy equipment costing £50,000 in a year, you can claim it all at once (not spread over years)
• Small businesses rarely hit the limit, so most plant and machinery is fully deductible in the purchase year
• Vehicles and buildings have different rules—they don't benefit from the full AIA

Writing Down Allowance (WDA)

If your asset exceeds the AIA or doesn't qualify, you claim depreciation through the WDA:

• Most plant and machinery: 18% per year on a reducing balance
• Some specific items (special rate pool): 8% per year

Example: You buy a van for £20,000. You claim the full amount under AIA in the purchase year (assuming you have AIA available). If later you buy another vehicle and exceed the AIA, the second vehicle uses WDA at 18% per year.

Expenses People Often Forget to Claim

These are legitimate business expenses that owners regularly overlook:

Professional Development and Training

• Courses and qualifications relevant to your business
• Webinars, online learning (Udemy, Skillshare, LinkedIn Learning)
• Books and publications on business topics
• Conference attendance (registration, not travel)
• Supervision or coaching (if related to your business)

Professional Memberships and Subscriptions

• Industry body memberships (BMA, Law Society, Engineering Council, etc.)
• Trade association fees
• Professional journals and publications
• Networking group memberships (if genuine business networking)

Protective Clothing and Specialist Wear

• Safety boots and protective footwear (fully claimable)
• High-visibility clothing with company branding
• Specialist workwear unique to your industry
• Gloves and protective equipment
• But not: Ordinary clothes worn for work (even if work-appropriate)

Business Use of Personal Mobile Phone

• If you use a personal phone 50% for business, claim 50% of the contract cost
• Include calls, data, and line rental in the calculation

Hospitality and Client Entertainment

• Meals with clients or potential clients (to discuss business)
• Refreshments during business meetings
• Client gifts (up to £50 per person per year without vat relief)
• Important: You need to evidence the business purpose. Keep records of who you met and why.

Website and Digital Costs

• Website development (if under £500, fully claimable; over £500, claimed over time)
• Website hosting and domain renewal
• Email hosting services
• SSL certificates
• SEO and digital marketing tools

Repairs vs. Improvements

• Repairs (claimable): Fixing a roof, repainting a wall, replacing a window
• Improvements (capital): Extending the roof, building a new wall, upgrading to triple-glazing

Bad Debts

• If a customer doesn't pay an invoice and you've given up trying, you can claim a bad debt deduction
• You must have previously recognised the income (so only relevant if you use accrual accounting)

Donations to Charity (with conditions)

• Donations to registered UK charities are claimable
• Must be genuinely given, not a quid pro quo

Interactive Expense Checker

Not sure if you can claim something? Type the expense below and we'll give you a quick assessment:

Common Examples (Click to See the Answer)

Record-Keeping: What You Need to Keep

HMRC can ask to see evidence of any expense you've claimed. You need records not only to claim expenses but to defend them if challenged. Here's what to keep:

Essential Records

• Invoices and receipts: For every significant expense, keep the original invoice or receipt
• Bank statements: Show how you paid (cash, card, bank transfer)
• Business mileage log: Record dates, journeys, miles, and business purpose (if claiming mileage)
• Working from home records: Document the hours worked from home (diary or timesheet)
• Client entertainment log: Date, who you met, what business was discussed, amount spent
• Professional development: Certificates of completion, course materials

How Long to Keep Records

• 5 years: Keep records for at least 5 years from the 31st January after the tax year ends
• Digital storage: Photos of receipts are acceptable; many use apps like Expensify or Wave to scan and store

Recommended Apps for Record-Keeping

App	Best For	Cost
Expensify	Receipt scanning and expense tracking	Free or £6/month
Wave	Full invoicing and accounting	Free
Xero	Cloud accounting for growing businesses	From £11/month
FreshBooks	Time tracking and invoicing	From £8/month
Mileage	Automatic mileage tracking (GPS)	Free or £6/month
Drivvo	Vehicle expense tracking	Free

Pro tip: The best system is the one you'll actually use. Choose an app that integrates with your banking (like Xero or Wave), and it'll automatically pull transactions so you just need to categorise them.

When an Accountant Saves You More Than They Cost

At LOYALS, we charge from £200/month for accountancy. Here's why that's often the best investment you'll make for your business:

The Numbers

If you miss just £3,000 in claimable expenses over a year, you're paying £900 extra tax (at 30% combined tax and NI). One good accountant recommendation pays for a year of fees.

What Your Accountant Finds

• Forgotten expenses: Most business owners claim 60-80% of what they're entitled to. A good accountant finds the missed 20-40%.
• Optimisation: The difference between claiming something as capital vs. revenue, or as one type of allowance vs. another, can save thousands.
• Industry-specific knowledge: We know what contractors, hospitality owners, and freelancers can claim because we work with them all year.
• Tax planning: Timing of purchases, salary vs. dividends (for limited companies), pension contributions—accountants have strategies that save far more than the fee.
• Peace of mind: If HMRC questions anything, your accountant handles the conversation. That alone is worth the fee.
• Record-keeping systems: We help you set up systems that make next year easier and cheaper.

Real Example

A plumber we work with: She was claiming her van fuel and basic home office costs. That was it. In her first year with us, we identified:

• Van insurance, maintenance, and servicing (£2,200 she'd been claiming as personal)
• Professional membership and training costs (£800)
• Uniforms and safety equipment (£400)
• Business portion of utilities (£1,200)
• Software and invoicing (£300)

Total additional claims: £4,900. At 30% tax rate, that's £1,470 saved in the first year alone. She's paid us £2,400 for the year, but the net saving to her is £1,470 (accounting for our fees). Plus, next year is faster and cheaper because the systems are in place.

The Bottom Line

The difference between a careful, strategic approach to business expenses and a vague estimate can be thousands of pounds every year. You've now got the knowledge to:

1. Understand the "wholly and exclusively" rule that governs everything
2. Claim every universal expense your business qualifies for
3. Identify industry-specific expenses you're entitled to
4. Understand capital allowances and depreciation
5. Keep proper records that satisfy HMRC
6. Know when to ask for professional help

Start today: go through your last month of expenses and check them against this guide. Highlight anything you haven't been claiming. Then set up a system (even a simple spreadsheet) to track these going forward.

If you're not confident about any category or you want a complete review of what you've claimed historically, that's exactly what accountants are for. At LOYALS, we work with every type of small business—from builders to beauty therapists to freelancers—and we know what you can claim because we've seen it all.