What Expenses Can Business Owners Claim? (And How to Maximise Your Tax Savings)
Are you making the most of the expenses you can claim? Or are you unknowingly paying more tax than you need to? As a business owner, every penny counts, and knowing what’s deductible can make a huge difference to your bottom line. But with so many rules and grey areas, it’s easy to get confused—or worse, miss out on savings.
So, let’s break it down. What can you actually claim, what should you avoid, and how can you make sure you’re maximising your tax savings?
What Qualifies as a Tax-Deductible Business Expense?
HMRC has one golden rule: an expense must be “wholly and exclusively” for business purposes. If something is used for both personal and business reasons you can only claim the portion that relates to your business.
A great rule of thumb? Ask yourself whether your previous employer would have paid for it. If the answer is no, then it’s likely not a valid business expense.
Common Business Expenses You Can Claim
| Expense Category | Examples |
|---|---|
| Office and Premises Costs |
If working from home please see separate section below. Office Rent, office mortgage interest, business rates, utilities, property insurance, cleaning, maintenance |
| Equipment and Supplies | Computers, laptops, printers, office furniture, software, subscriptions, stationery |
| Travel and Vehicle Expenses | Business mileage (usually 45p per mile if using your own car), public transport, flights, taxis, accommodation, fuel, insurance, road tax, parking fees (not fines) |
| Marketing and Advertising | Website costs, paid ads (Google, Facebook, LinkedIn), branding, networking, sponsorships |
| Staff and Subcontractor Costs | Salaries, wages, National Insurance contributions, pension contributions, freelancers, subcontractors |
| Training and Development | Courses, workshops, seminars (must be relevant for sole traders, more flexibility for limited companies), books, magazines, online learning |
| Professional Fees | Accountant fees, business insurance, legal fees, memberships for professional organisations |
| Work-from-Home Expenses |
Either claim HMRC’s flat rate allowance of £6/week or actual costs (Proportion of Rent, utilities, broadband, phone bills, council tax – records and calculations must be kept). One mobile phone per employee/director can also be claimed in addition to this. |
What About Working Holidays?
Can you mix business with pleasure? Yes—but be careful! If your trip has a genuine business purpose, you can claim:
- Flights – Only your own if travelling with family.
- Accommodation – Only for business-related days.
- Meals – Only for work-related days and meetings.
However, any personal costs—like your family’s flights, extra nights, or leisure activities—are NOT claimable. Keep detailed records and a clear schedule of work activities to justify your claims.
Expenses You Cannot Claim
Let’s clear up some common misconceptions—these expenses don’t qualify for tax relief:
- Client entertainment – While you can record it as a business expense, it does not qualify for tax relief.
- Speeding fines or parking tickets
- Clothing (unless it’s branded uniforms or protective gear)
- Personal expenses (anything not directly related to the business)
- Family members’ travel costs (unless they are actively working on the trip)
- Training costs for sole traders if learning a completely new skill unrelated to their current business. Limited companies have more flexibility.
How to Maximise Your Tax Savings
Want to make sure you’re claiming everything you should? Follow these steps:
- Keep Clear Records – Store receipts, invoices, and bank statements digitally.
- Use Accounting Software – These make expense tracking simple.
- Speak to an Accountant – They’ll ensure you claim everything legally possible.
- Separate Business and Personal Finances – Always use a dedicated bank account for your business.
- Keep Track of Your Expenses Regularly – Many business owners under-claim without realising it.
Final Thoughts
Tax shouldn’t feel like a mystery. Knowing what you can and can’t claim helps you keep more of your money, stay compliant, and reduce stress.
Still unsure? Need expert help? Let’s chat and make sure you’re claiming every penny you’re entitled to!
