How to Claim Allowable Business Expenses: The Complete List

Every pound of allowable business expenses you miss is tax money you're overpaying to HMRC. If you're running a small business, you're already wearing enough hats — accountant, marketer, HR manager. The last thing you need is to accidentally hand over more tax than the law requires. Yet that's exactly what happens when business owners miss legitimate deductions. This guide covers the complete list of what you can claim as allowable business expenses, how to categorise them, and the rules HMRC actually cares about (spoiler: there aren't as many as you'd think).

The golden rule

HMRC allows you to deduct any expense incurred "wholly and exclusively" for the purposes of your trade. In practice, that means:

The expense must genuinely relate to running your business
If it's part personal, part business, you claim only the business bit
The expense must be revenue in nature (not capital — capital purchases use capital allowances instead)

The simple test: would you have spent this money if you weren't running a business? If no, it's likely deductible. (A software subscription you need to invoice clients: deductible. A subscription you're curious about but don't use: probably not. Yes, HMRC knows where you'll draw that line.)

One misconception worth killing: "wholly and exclusively" doesn't mean HMRC auditors are examining every receipt under a microscope. It means if you can explain the expense and it's reasonable, you can claim it. For corporation tax purposes, HMRC doesn't demand receipts for every £5 coffee, and they don't audit 99% of small businesses on expense claims.

Office and premises

Whether you rent a high street shop or work from your kitchen table, you can claim:

Rent for your business premises
Business rates (and council tax on the business portion if you work from home)
Utilities — electricity, gas, water, broadband (business proportion if it's at home)
Property insurance
Maintenance and repairs — fixing a broken desk or patching damp is fine. Building an extension is not (that's capital, handled separately)
Cleaning and cleaning supplies
Security and alarm systems

Working from home

If you run your business from home, you have two options:

Simplified method: Claim a fixed rate based on hours worked per month. HMRC's flat rates are £10/month (25–50 hours), £18/month (51–100 hours), or £26/month (101+ hours). This is easier and requires no receipts.

Actual costs method: Calculate the business proportion of your real costs — rent or mortgage interest, utilities, insurance, broadband. This usually means dividing the number of rooms you use for work by the total rooms in the house. Most people find the actual costs method gives a bigger deduction, but it requires keeping proper records.

Tracking your business expenses properly gets easier once you separate your business finances — the cleaner your records, the faster tax time moves.

Travel, transport, and mileage

This is where small businesses often leave money on the table. You can claim:

Public transport for business journeys (train, bus, taxi)
Business mileage at HMRC approved rates: 45p per mile for the first 10,000 miles, then 25p per mile. You don't need receipts — just a log of journeys and purposes
Parking and tolls for business trips
Hotel and accommodation for overnight business travel
Flights for business trips
Subsistence — meals while you're away from base on business

What doesn't count: your daily commute from home to your regular office (that's personal). Parking tickets and speeding fines (you can't deduct penalties). Any private driving.

Full guidance on mileage expenses, rates, and rules is in our detailed guide — it's worth reviewing because the mileage allowance is one of the most underused deductions.

People, professional services, and training

If you have employees or contractors, you can claim:

Salaries and wages
Employer's National Insurance (not your employees', just yours)
Employer pension contributions
Staff training directly related to the business
Recruitment costs — advertising, agency fees, interview expenses
Staff welfare — reasonable staff entertainment (Christmas party, team lunch). The limit is £150 per person per year before it becomes taxable income
Temporary staff, freelancers, and contractors

Professional services include:

Accountancy and bookkeeping — tax returns, year-end accounts, payroll processing
Legal fees — for business matters (not personal disputes or property purchases)
Professional subscriptions and memberships relevant to your industry
Business consultancy — marketing advice, IT support, strategy consulting
Bank charges and interest on business accounts or loans
Debt collection costs

Training counts if it relates to skills you need for your current business. A plumber training to use new pipe-fitting technology: deductible. A plumber doing a course to become a therapist: not deductible. Conferences, workshops, and professional development in your field all count.

Marketing, technology, and insurance

These are running costs that fuel your business:

Marketing and sales:

Advertising (Google Ads, Facebook, print)
Website costs — hosting, domain, design, maintenance
Business cards, stationery, print materials
Social media management tools and email marketing software
Trade show fees and sponsorship
PR and promotional costs

Technology and software:

Software subscriptions — accounting software, CRM, project management, helpdesk tools
Cloud services and SaaS platforms
Business phone line and internet (or the business proportion of your home phone and broadband)
Computer and office equipment under your capital threshold
Printer ink, cables, USB drives — consumables
Cybersecurity software and subscriptions

One note: business accounting and management software — including accounting, CRM, helpdesk, and task management tools — is itself a fully deductible expense. Every SaaS platform you use to run your business qualifies, and having proper software often means better financial records at tax time.

Insurance:

Professional indemnity
Public liability
Employer's liability (compulsory if you have staff)
Business contents and property insurance
Business interruption insurance
Cyber insurance
Key person insurance (if it protects business revenue)

Commonly overlooked expenses and what you cannot claim

Small-business owners frequently miss these deductible costs:

Protective clothing or uniforms required for work (not regular clothing)
Business subscriptions — professional memberships, trade publications
Postage and courier services
Small tools and equipment below the capital threshold
Bank charges on business accounts
Software subscriptions — you'd be surprised how quickly these add up and how few people claim them all
Professional books and publications related to your business
Business vehicle insurance and MOT

What you cannot claim:

Client entertainment — meals, drinks, events for clients (this surprises everyone, but it's not deductible)
Personal expenses — clothing (unless it's a uniform), your daily commute, personal phone bills
Fines and penalties — parking tickets, speeding fines, HMRC penalties
Political donations
Provisions for future costs — you can only claim costs you've actually incurred

FAQ

Q: Do I need receipts for everything? A: Legally, yes. HMRC can ask for evidence of any claim. In practice, they're less concerned about expenses under £20 if you've kept records. Photograph receipts on your phone and file them properly — it takes 30 seconds and saves hours at tax time.

Q: Can I claim my home office if I only use it part-time? A: Yes. The simplified method is actually designed for people who work from home part-time — you just claim the rate that matches your hours worked. Or use the actual costs method and claim the business proportion.

Q: When I buy a laptop, is that an expense or capital? A: Capital. But don't panic — you claim it through capital allowances, which often gives a bigger and faster deduction than spreading it over years. Most small businesses qualify for the Annual Investment Allowance (AIA), which lets you deduct up to £1 million of capital expenditure in the year you buy it.

Q: What if I use my car for both business and personal driving? A: Claim only the business portion. Track your mileage properly with a log of journeys and purposes. HMRC's approved rates (45p then 25p per mile) exist so you don't have to calculate actual costs.

Q: Do I pay tax on staff entertainment like a Christmas party? A: If it's under £150 per person per year, no. Above that, it becomes a taxable benefit for your employees. A team lunch under £150 per head is fine. A four-figure dinner is getting into territory where HMRC will ask questions.

Q: I bought software three months ago and haven't used it yet. Can I claim it? A: If you've genuinely incurred the cost (you've paid for it), yes. You claim it in the period you paid, not when you use it. If you haven't paid yet, claim it in the period you pay.

Q: Is my business interest on a loan deductible? A: Yes. Business interest on a business loan is fully deductible. Personal interest (like credit card interest on personal spend) is not.

The bottom line

Claiming all your allowable business expenses isn't aggressive tax planning. It's paying the correct amount of tax — no more, no less. Every legitimate deduction you miss is money you've unnecessarily given away.

Set up a system to capture expenses as they happen — use your business bank account to keep records clean, and set up your chart of accounts so everything goes in the right bucket. Over the life of your business, the cumulative tax saving can be substantial — often enough to justify better accounting software in the first place.

Try Relentify's accounting tools free for 14 days. One login covers invoicing, expense tracking, reports, and tax prep — no spreadsheets, no Zapier, just a system designed for how you actually work.