Claiming the right expenses lowers your tax bill legitimately. This guide explains HMRC's 'wholly and exclusively' test, common allowable costs, and what you cannot claim.
Published July 2026 · Updated July 2026
HMRC allows costs incurred wholly and exclusively for the business. If a cost is partly personal (like a phone used for both), you claim only the business proportion.
Typical claims include software and subscriptions, business travel and mileage, stock and materials, professional fees, insurance, and a reasonable share of home-working costs. Keep receipts for everything you claim.
Client entertaining, fines and penalties, and anything personal are not allowable. Larger, lasting purchases like equipment are 'capital' and handled through capital allowances rather than as a simple expense.
Claim confidently by keeping digital records and receipts. Without evidence, HMRC can disallow a deduction if it queries your return, so good bookkeeping protects your claims.
You earn £45,000 and have £11,000 of allowable expenses:
Yes, either a proportion of actual home costs or HMRC's simplified flat rate, depending on how much you work from home.
Reasonable subsistence while travelling for work can be. Everyday meals near your usual workplace generally are not.
Day-to-day running costs are expenses; lasting assets like equipment are capital, claimed through capital allowances instead.
This guide is general information for UK small business owners, not accounting, tax or legal advice. Rules, rates and thresholds reflect 2026/27 and change over time; always check the linked official source or a qualified adviser for your situation.