The difference between a profitable business and a struggling one often comes down to tax planning. Yet most small business owners overpay on tax simply because they don't claim all the expenses they're entitled to.
This guide covers every legitimate business expense you can claim to reduce your Corporation Tax bill (or Self Assessment if you're a sole trader).
The Basics: What Qualifies as a Business Expense?
To be tax-deductible, an expense must be:
- Wholly and exclusively for business purposes
- Necessary for your trade
- Not capital expenditure (unless claiming capital allowances)
The key test: would you have incurred this cost if you weren't running your business? If the answer is no, it's probably deductible.
⚠️ Important: Keep records for at least 6 years. HMRC can request proof of any expense you've claimed. No receipt = no deduction.
Office & Workspace Costs
If You Rent Office Space:
- Rent and service charges
- Business rates
- Utilities (electricity, gas, water)
- Internet and phone
- Office cleaning
- Building insurance
If You Work from Home:
You can claim a portion of household costs based on the percentage of your home used for business:
- Simplified method: £6/week (no records needed, max £312/year)
- Actual costs method: Calculate business use % and claim that portion of rent, utilities, insurance, council tax
Example: If your home office takes up 15% of your house, you can claim 15% of your mortgage interest, utilities, and council tax.
Office Equipment & Furniture:
- Desks, chairs, filing cabinets
- Computers, laptops, monitors
- Printers, scanners
- Software subscriptions (Xero, Microsoft 365, Adobe)
- Stationery and office supplies
Travel & Vehicle Costs
Business Mileage:
If you use your personal car for business, you can claim:
- 45p per mile for the first 10,000 miles
- 25p per mile after 10,000 miles
What counts as business mileage:
- Client meetings
- Site visits
- Supplier meetings
- Business banking
- Collection/delivery of business items
What DOESN'T count:
- Commuting to your permanent workplace (not deductible)
- Personal journeys
Company Vehicles:
If the business owns the vehicle, you can claim:
- Fuel (business portion only)
- Insurance
- Repairs and servicing
- Road tax
- MOT
- Parking (business-related)
Other Travel:
- Train, bus, taxi fares
- Hotel accommodation (business trips)
- Flights (UK and overseas business travel)
- Subsistence (meals while travelling on business)
💡 Pro Tip: Use a mileage tracking app (MileIQ, TripLog) to automatically log business journeys. Manual logbooks are fine but take more time.
Staff Costs
- Salaries and wages (including your own if you're a limited company)
- Employer National Insurance
- Pension contributions (employer portion)
- Recruitment costs (job ads, agency fees)
- Staff training (courses, conferences, professional development)
- Staff entertainment (Christmas party, up to £150 per person per year)
- Eye tests and glasses (if staff use screens)
Professional & Financial Services
- Accountancy fees (our services, for example)
- Legal fees (business-related only)
- Bank charges and loan interest
- Professional subscriptions (industry bodies, licenses)
- Insurance (public liability, professional indemnity, business contents)
- Debt collection fees
Marketing & Sales Costs
- Website costs (hosting, domain, design)
- Advertising (Google Ads, Facebook Ads, print ads)
- Marketing materials (business cards, brochures, signage)
- PR and marketing agencies
- Photography (for website, products)
- SEO and digital marketing
- Trade show fees and exhibition costs
Other Allowable Expenses
Stock and Materials:
- Raw materials
- Stock for resale
- Packaging materials
- Postage and delivery
Technology:
- Cloud services (AWS, Google Cloud, Azure)
- SaaS subscriptions (Salesforce, HubSpot, Slack)
- Domain registration and SSL certificates
- Mobile phone contracts (business use %)
Utilities & Communications:
- Telephone and broadband
- Mobile phones (business use)
- Postal services
Finance Costs:
- Business loan interest
- Hire purchase interest
- Bank charges and fees
- Credit card charges (business transactions)
Common Mistakes to Avoid
1. Not Claiming Home Office Costs
If you work from home at all, you're entitled to claim something—even if it's just the simplified £6/week allowance.
2. Missing Business Mileage
At 45p/mile, this adds up fast. A 10,000-mile year = £4,500 deduction.
3. Forgetting Small Expenses
Stationery, printer ink, coffee with clients—these seem minor but total hundreds per year.
4. Not Separating Personal and Business
Mixed-use expenses (like a mobile phone) need to be apportioned. Claim only the business %.
5. Missing Deadlines for Records
You must keep records for 6 years minimum. Digital is fine—just keep them organised.
💡 Golden Rule: When in doubt, ask your accountant. It's better to check before claiming than to deal with HMRC queries later.
Maximising your tax deductions?
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