The golden rule
You can generally claim costs incurred 'wholly and exclusively' for the business. If a cost is purely for trading, it reduces your taxable profit. If it is part-personal, you can usually only claim the business share — and some things are never allowable, however you frame them.
Commonly allowable costs
- Office costs: stationery, software subscriptions, phone and internet (business share).
- Travel for work: mileage or fares, and accommodation on business trips.
- Staff costs: salaries, employer pension contributions, subcontractors.
- Professional fees: accountant, legal, business insurance.
- Marketing: website, advertising, branding.
- Equipment: computers and tools (sometimes via capital allowances).
Watch the grey areas
- Meals and entertainment have specific, restrictive rules.
- Working-from-home costs can be claimed, but only a fair proportion.
- Clothing is rarely allowable unless it is genuine protective or branded uniform.
- Anything with a personal element must be apportioned honestly.
Keep the evidence
Claims stand or fall on records. Keep receipts and invoices, log business mileage, and let accounting software capture and categorise as you go. If HMRC ever asks, contemporaneous records are your best friend. When in doubt on a specific cost, check GOV.UK or ask your accountant rather than guessing.
Frequently asked questions
Can I claim for working from home?+
Yes, you can claim a fair proportion of relevant household costs, or use a simplified flat-rate method. You cannot claim the full cost of things you also use personally.
Are client lunches deductible?+
Business entertainment has restrictive rules and is often not deductible for tax, even though it is a genuine business cost. Check the specific position before assuming you can claim it.
What happens if I over-claim?+
Incorrect claims can lead to tax owed plus penalties and interest. Claim only genuine business costs, apportion mixed-use costs honestly, and keep records to back everything up.