What can I claim as a business expense? (the honest list)

Note: Expense rules, flat rates and allowances change, and some cases are genuinely grey. Treat this as a plain-English guide, not a ruling — confirm anything uncertain with HMRC or your accountant.

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Why this matters more than it sounds

Every legitimate expense you claim lowers your taxable profit — and lower profit means a lower tax bill. So this isn't dry admin. Forgetting to claim expenses is quietly handing HMRC money you didn't owe.

But there's a flip side. Claiming things you shouldn't is how you end up with a penalty if HMRC ever looks. So the goal is honest and complete: claim everything you're genuinely entitled to, and nothing you're not.

This is the plain-English version — the things you can claim, the ones people forget, the ones people wrongly try to claim, and the single rule that governs all of it. We'll keep it honest, because half-truths about expenses are exactly what gets founders into trouble.

The one rule that governs everything: "wholly and exclusively"

There's a single test behind almost every expense decision, and it's worth tattooing on your brain.

A cost is allowable if it's incurred "wholly and exclusively" for the purposes of your business.

In plain English: was this only for the business? If yes, it's claimable. If it's partly personal, partly business, you can usually only claim the business portion — and if it's really for you with a thin business excuse, you can't claim it at all.

A laptop you only use for work: wholly and exclusively, claim it. A coat you wear to client meetings and to the pub: not exclusively business, can't claim it. A phone bill split between work and personal calls: claim the business portion. Hold every expense up to that one question and most of your decisions answer themselves.

What you can usually claim

Here's the honest list of costs most small businesses can claim. Exact treatment varies between sole traders and limited companies, and some have flat-rate alternatives — but as a plain-English starting point:

• Office costs — rent, business rates, utilities for business premises, stationery, postage.
• Equipment and tools — laptops, phones, machinery, software subscriptions. Bigger items may be claimed through capital allowances rather than as a straight expense.
• Stock and raw materials — what you buy to sell or to make what you sell.
• Staff costs — wages, salaries, employer's National Insurance, pension contributions, subcontractor payments.
• Travel for work — train fares, fuel or mileage, parking, accommodation on business trips. (Note: your normal commute to a permanent workplace usually doesn't count.)
• Professional fees — your accountant, business insurance, certain legal costs, professional memberships relevant to your trade.
• Marketing — your website, advertising, business cards, promotional costs.
• Bank and finance costs — business bank charges, interest on business loans, payment processing fees.
• Training — courses that update or maintain skills for your existing trade (brand-new skills for a new venture are murkier — see below).

If a cost is plainly part of earning your income and passes the "wholly and exclusively" test, it almost certainly belongs here.

The ones people miss (free money left behind)

These are legitimate and often forgotten, especially by founders working from home or on the move:

Working from home. If you run your business from home, you can claim a share of your household costs — heating, electricity, broadband, a portion of rent or council tax. There's usually a simple flat-rate option based on hours worked, or you can work out the actual proportion. Most home-based founders forget this entirely.

Use of your own phone and internet. The business portion of your personal phone and broadband is claimable. Estimate it honestly and keep a note of your reasoning.

Mileage in your own car. If you use your personal car for business journeys, you can usually claim a set rate per mile rather than tracking actual running costs. Keep a simple log of business trips.

Software and subscriptions. The little monthly tools add up — design apps, cloud storage, your accounting software, professional newsletters. Each is small; together they're real money.

Bank and card fees. The processing fees on every customer payment are a business cost. They're easy to overlook because they come straight out before the money reaches you.

The pattern: the missed expenses are usually the small, recurring, half-personal ones — exactly the items that slip through if you're not recording costs as they happen.

What you can't claim (the honest part)

This is where people get into trouble, so let's be straight about it.

Everyday clothing. Even if you bought a suit specifically for work, normal clothes aren't claimable — they're not "wholly and exclusively" for business because you could wear them anywhere. Genuine uniforms, protective gear and branded kit are different and can be claimed.

Client entertaining. Taking a client to lunch or to an event is generally not an allowable expense for tax, however good it is for the relationship. (Staff entertaining, within limits, can be treated differently.)

Anything personal. Your own food on a normal working day, personal grooming, your home life — not claimable. The grey area is the split items; the rule is claim only the genuine business slice.

Fines and penalties. Parking fines, late-filing penalties and the like aren't allowable. HMRC won't subsidise breaking the rules.

The full cost of mixed-use items. A car, a phone, a room at home used for both business and personal — you claim the business proportion, not the whole thing.

The honest line to walk: if you'd be uncomfortable explaining the claim to an HMRC officer with a straight face, don't make it. When in doubt, claim the clearly-business portion and confirm the rest.

Keep the receipts (or it didn't happen)

Here's the unglamorous truth underneath all of this: an expense you can't evidence is an expense you can't safely claim.

HMRC can ask you to back up your figures, and "I'm pretty sure I spent it" doesn't cut it. You need the receipt or invoice, ideally kept for several years. This is why expense-claiming and record-keeping are really the same job — the claim is only as good as the proof behind it.

Doing this on paper is miserable. Receipts fade, get lost, or pile up in a drawer until year-end, when you're squinting at a faded coffee receipt trying to remember if it was a client meeting. Capturing each one the moment it happens — a photo, a note of what it was for — is the difference between confidently claiming everything and nervously claiming less than you're owed.

Ready to stop doing this by hand? → (See: Receipt tracking that actually works.)

Why getting this right matters

Done well, expenses are one of the few entirely legitimate ways to reduce your tax bill — so leaving them on the table is a real, recurring cost. Done badly, they're a liability that surfaces at exactly the wrong moment.

The founders who get this right aren't tax experts. They've just built one small habit: capture every business cost as it happens, with proof, and let the totals do the work at year-end. That habit means they claim everything they're owed, claim nothing they're not, and never lose a weekend reconstructing a year of spending from memory.

It also matters when anyone looks closely. Clean, evidenced expenses tell an accountant, a lender or an investor that you run a tidy business. Vague, padded or missing records do the opposite.

The short version

You can claim costs that are "wholly and exclusively" for the business — office costs, equipment, stock, staff, work travel, professional fees, marketing, finance costs, relevant training, and a share of home, phone and car use. You can't claim everyday clothing, client entertaining, anything personal, fines, or the personal portion of mixed-use items. Keep the receipt for everything, capture it as it happens, and confirm anything grey with HMRC. Claim everything you're owed — and nothing you're not.

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Ready to stop doing this by hand? In Ledgers, you snap a photo of a receipt and it becomes a categorised expense, automatically matched to the bank payment — so every claim is captured, evidenced and ready at year-end, without the shoebox. See your numbers without learning accounting → start free.

Want every tax date in one place? The UK small business tax calendar →

Filing soon? Self Assessment for the terrified — a step-by-step →

Frequently asked questions

What counts as an allowable business expense in the UK?

A cost incurred "wholly and exclusively" for your business — office costs, equipment, stock, staff, work travel, professional fees, marketing and so on. If a cost is genuinely part of earning your income and you have proof, it's usually allowable.

Can I claim working-from-home costs?

Yes. If you run your business from home you can claim a share of household costs like heating, electricity and broadband — often via a simple flat rate based on hours worked, or by calculating the actual business proportion.

Can I claim entertaining clients as an expense?

Generally no — client entertaining isn't an allowable expense for tax, even though it's good for business. Staff entertaining can be treated differently, within limits. Confirm the current rules with HMRC.

Do I need receipts to claim expenses?

Yes. HMRC can ask you to evidence your figures, so keep receipts or invoices for the required number of years. An expense you can't prove is one you can't safely claim — capturing each receipt as it happens is the safest habit.

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