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Tax

What expenses can I claim through my business?

The rule is simpler than most people think, and the grey areas are narrower. Here is what genuinely counts as a business expense.

17 March 2026 · 7 min read · Bruce Thomas

Receipts and invoices sorted for an expense claim

Expenses are the area where business owners most often either lose money by under-claiming or create risk by over-claiming. Both come from the same source: not being clear on the underlying test.

The wholly and exclusively test

A cost is allowable if it is incurred wholly and exclusively for the purposes of the trade. If a cost has a genuine dual purpose that cannot be separated, it generally fails — but where a clear business proportion can be identified and evidenced, that proportion can usually be claimed.

Costs that are usually straightforward

  • Materials, stock and subcontractor costs
  • Tools, equipment and software used in the business
  • Business insurance, professional subscriptions and trade memberships
  • Accountancy and legal fees relating to the trade
  • Staff wages, employer's National Insurance and employer pension contributions
  • Business travel, including mileage at approved rates
  • Advertising, website costs and printing

Costs that need care

  • Home as office: claim a reasonable proportion or the flat rate, and keep the basis of your calculation
  • Vehicles: mileage is simpler for most sole traders; company cars bring a benefit-in-kind charge that often outweighs the saving
  • Clothing: only genuine protective wear and branded uniform, not ordinary clothes worn for work
  • Client entertaining: not deductible for tax, even though it is a real business cost
  • Training: allowable where it maintains existing skills, more contentious where it creates an entirely new one
  • Mobile phone: a company contract in the business name is treated far more cleanly than a personal one

Evidence is the whole game

A claim you cannot evidence is a claim you may have to give back with interest. Photograph receipts at the point of spending, keep the record attached to the transaction in your software, and note the business reason where it is not obvious from the supplier name.

If a cost feels like it needs an explanation, write the explanation down at the time. Reconstructing it two years later during an enquiry is far harder.

The bigger opportunity

In most reviews of a new client's records, the larger figure is not disallowed claims — it is legitimate costs never entered at all: personally paid subscriptions, small tools bought on a card, mileage never logged. Getting a proper capture routine in place usually pays for itself.

This article is general guidance for business owners in the UK and does not amount to advice for your particular circumstances. Tax rules change and the right answer depends on your figures — please take specific advice before acting.

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