A Beginner's Guide to Claiming Allowable Expenses in the UK

One of the most effective ways to lower your tax bill as a self-employed individual or limited company is by claiming all your legitimate business expenses. But what exactly can you claim? The core principle from HMRC is that an expense must be "wholly and exclusively" for business purposes. This guide breaks down what that means and covers some of the most common categories of allowable expenses.

Office and Equipment Costs

These are the day-to-day costs of running your business.

• Stationery: Pens, paper, postage, printer ink, and other office supplies are fully deductible.
• Computer Equipment: Laptops, printers, and other hardware are allowable. You would typically claim these through Capital Allowances.
• Software: Subscriptions to accounting software (like Xero), design software (like Adobe Creative Cloud), or productivity tools are allowable.

Working from Home

If you work from home, you can claim a portion of your household bills. You can do this in two ways:

• Simplified Flat Rate: HMRC allows you to claim a set monthly amount based on the hours you work from home. This is the easiest method.
• Calculate a Proportion: You can calculate the business proportion of your actual costs, such as heating, electricity, council tax, and mortgage interest or rent. This requires more detailed records but can result in a larger claim.

Travel and Subsistence

You can claim for travel costs related to your business, but not for your normal commute to work.

• Mileage: If you use your own vehicle, you can claim a flat rate per mile (e.g., 45p per mile for the first 10,000 miles for cars). Our Business Mileage Calculator can help with this.
• Other Travel: Costs for train, bus, air, and taxi fares for business trips are allowable.
• Accommodation: Hotel costs for overnight business trips are also claimable.

Marketing and Professional Fees

• Advertising: Costs for website hosting, online ads (Google, Facebook), and printing flyers are allowable.
• Professional Subscriptions: Fees for membership to professional bodies or subscriptions to trade journals relevant to your work are deductible.
• Accountancy Fees: The cost of hiring an accountant for your business finances is an allowable expense.

Important Note: This is a general guide. Always keep detailed records and receipts for all your expenses. If you are unsure about a specific expense, it is always best to consult with a qualified accountant.