Business Expenses – What Can You Claim and Save on Tax?
If you’re running a business – whether it’s a tech start-up or a consultancy from your home office – knowing what you can claim as a business expense can make a huge difference to your tax bill.
HMRC allows you to deduct certain costs from your income before calculating your tax. These allowable business expenses can help reduce Corporation Tax for limited companies or Income Tax if you’re self-employed. The key? Expenses must be wholly and exclusively for business purposes – and you’ll need to keep accurate records.
What Counts as a Business Expense?
A business expense is any cost you incur purely for running your business. HMRC is strict, so personal costs can’t be claimed. Keeping clear records is essential, whether you’re using a spreadsheet, Excel, or cloud accounting software.
Common Allowable Business Expenses for Businesses
1. Office Costs
- Rent for business premises
- Utility bills
- Office supplies (stationery, printer ink)
- Business phone and internet costs
2. Staff Costs
- Salaries and wages
- Bonuses
- Employer’s National Insurance contributions
- Staff pensions and training
3. Travel and Transport
- Business mileage (HMRC rates apply)
- Fuel, train fares, flights, and taxis for business trips
- Vehicle insurance, servicing, and repairs (business use only)
Note: Commuting from home to your regular workplace is not claimable.
4. Stock and Materials
- Goods bought for resale
- Raw materials for production
- Packaging and delivery costs
5. Marketing and Advertising
- Website design and hosting
- Social media advertising
- Leaflets, business cards, and local sponsorships
6. Professional Services
- Accountant or bookkeeper fees
- Legal advice
- Consultancy services
7. Insurance
- Public liability insurance
- Professional indemnity insurance
- Business equipment cover
8. Subscriptions and Memberships
- Professional associations (ICAEW, CIPD, etc.)
- Industry trade bodies
- Relevant business publications
9. Training and Development
- Courses and CPD related to your current business activities
10. Use of Home as an Office
If you work from home, you can claim part of your:
- Heating and electricity
- Council tax
- Broadband costs
HMRC offers a flat-rate option or you can calculate the actual percentage used.
What You Can’t Claim
Some costs are not allowable:
- Personal expenses (holidays, groceries, non-uniform clothing)
- Client entertainment (meals, drinks, tickets)
- Fines or penalties
- Loan repayments (though interest may be allowable)
Why This Matters
With high operating costs from premium office rents to competitive staffing rates – maximising your allowable expenses is vital for cash flow and profitability. Regularly reviewing your costs with a local accountant can ensure you’re claiming everything you’re entitled to, without risking HMRC penalties.
Final Word
Knowing what you can and can’t claim keeps your business financially healthy and your tax bill as low as possible. If you’re unsure, GMS Business Accountants can help you review your expenses and make sure you’re tax-efficient and compliant.
