Allowable Business Expenses: Complete Checklist
Understanding which expenses you can claim as a self-employed person or business owner is crucial for minimizing your tax bill. This comprehensive guide covers all allowable business expenses in the UK and how to claim them correctly.
What Makes an Expense Allowable?
According to HMRC, an allowable business expense must meet these criteria:
- Wholly and exclusively for business purposes
- Not capital expenditure (buying assets for long-term use)
- You must have evidence (receipts, invoices, or bank statements)
Complete Allowable Expenses Checklist
Office Costs
- Rent for business premises - Office, shop, or warehouse rent
- Business rates - Council tax on business properties
- Utilities - Electricity, gas, water for business premises
- Property insurance - Buildings and contents insurance
- Security - Alarm systems and monitoring services
Travel & Vehicle Costs
- Business mileage - 45p per mile (first 10,000 miles), 25p thereafter
- Vehicle insurance - Business use portion
- Fuel - For business journeys only
- Parking and tolls - Business-related only
- Public transport - Train, bus, tube fares for business travel
- Hotel accommodation - Overnight stays for business purposes
Staff Costs
- Employee salaries and wages
- Employer's National Insurance
- Pension contributions - Employer contributions
- Staff training - Job-related courses and qualifications
- Recruitment costs - Agency fees, advertising
Marketing & Advertising
- Website costs - Domain, hosting, development
- Online advertising - Google Ads, Facebook Ads, LinkedIn
- Print advertising - Flyers, brochures, business cards
- SEO and content marketing
Professional Fees
- Accountancy fees
- Legal fees - Solicitors, contracts
- Bank charges - Business account fees
- Insurance - Professional indemnity, public liability
- Subscriptions - Professional bodies, trade associations
Other Allowable Costs
- Phone and internet - Business use portion
- Postage and stationery
- Software subscriptions - Accounting, CRM, project management
- Stock and raw materials
- Equipment repairs and maintenance
Expenses You Cannot Claim
These expenses are NOT allowable and will be rejected by HMRC:
- Personal expenses - Clothing (unless uniform), personal grooming
- Entertainment costs - Client meals, corporate hospitality
- Fines and penalties - Parking fines, HMRC penalties
- Personal income tax - Your own tax bill
- Commuting - Travel from home to your regular place of work
Record Keeping Best Practices
HMRC requires you to keep records for at least 5 years after the 31 January submission deadline. Here's how to stay organised:
Keep All Receipts
Save receipts for every business purchase, no matter how small. Digital copies are acceptable.
Use Accounting Software
Cloud-based tools like Xero or QuickBooks automatically categorize and store your expense records.
Separate Business & Personal
Use a dedicated business bank account and credit card to simplify tracking and avoid mixing personal expenses.
Keep Mileage Logs
Record date, destination, purpose, and miles for every business journey. Apps like MileIQ can automate this.
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