Business Expenses in the UK: What You Can and Can’t Claim

Running a business comes with lots of expenses—but not all of them are tax-deductible. Knowing which costs HMRC allows you to claim can make a real difference to your bottom line and keep you on the right side of the tax rules.

Here’s a simple guide to help you understand what you can and can’t claim as business expenses in the UK.

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What You Can Claim

These are known as allowable expenses—costs that are wholly and exclusively for business use.

1. Office Costs

• Rent, rates, and utility bills for business premises

• Stationery, postage, and printer ink

• Office furniture and equipment (computers, desks, chairs)

2. Staff Costs

• Salaries and wages

• Employer’s National Insurance and pension contributions

• Payments to subcontractors

3. Travel and Subsistence

• Mileage (using HMRC’s rates) or actual vehicle running costs

• Public transport, parking, tolls for business travel

• Hotels and meals while away on business

Commuting from home to work isn’t claimable—only travel for specific business purposes is.

4. Marketing and Advertising

• Google Ads, social media promotions, and printed flyers

• Website development and hosting

• Branded promotional goods

5. Professional Services

• Accountants, solicitors, and consultants

• Subscriptions to trade bodies or professional publications

6. Banking and Finance

• Business bank account charges

• Interest on business loans and overdrafts

7. Stock and Supplies

• Goods bought for resale

• Raw materials for production

8. Use of Home as Office

If you work from home, you can claim a proportion of:

• Heating, electricity, internet, and council tax (but you need to be able to separately identify them and is more difficult if you run a Limited Company rather than as a sole trader)

• Or, opt for HMRC’s simplified flat rate

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What You Can’t Claim

Some expenses, even if linked to your business, aren’t allowable for tax purposes.

1. Personal Expenses

• Everyday clothing (unless it’s protective or branded)

• Personal meals or entertainment

• Household bills not related to business use

2. Client Entertainment

• Taking clients out to restaurants or events

• Corporate hospitality

These are classed as “business entertainment” and not tax-deductible.

3. Fines and Penalties

• Parking tickets

• HMRC penalties or interest on late payments

4. Depreciation

• You can’t claim depreciation of assets—but you can claim capital allowances instead.

5. Gifts to Clients

Only allowable if:

• It costs less than £50

• It’s not food, drink or tobacco

• It has a clear business logo or branding

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Capital vs Revenue Expenses

Think of it like this:

• Revenue expenses are your everyday running costs → claimable immediately

• Capital expenses are things like vans, machinery, or large equipment → claimable through capital allowances

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Keep It Clean: Good Record-Keeping Matters

To make valid claims and avoid HMRC scrutiny:

• Keep receipts, invoices, and bank statements organised

• Log everything—digital records are ideal

• Separate your personal and business spending