Business Expenses: What You Can and Can’t Claim

Understanding what business expenses you can claim is crucial for managing your finances and ensuring you remain compliant with HMRC regulations. Knowing the rules can help maximise your tax deductions, potentially saving your business a significant amount of money each year. Here’s a guide to what you can and can’t claim as business expenses in the UK.

What You Can Claim:

1. Office Costs:

   • Rent and Utilities: You can claim rent, utilities (like electricity, water, and gas), and business rates for your office.
   • Office Supplies: Items like stationery, printer ink, and postage costs are deductible.

2. Travel Expenses:

   • Vehicle Costs: If you use a vehicle solely for business, you can claim the full cost of fuel, repairs, servicing, insurance, and other running costs. For vehicles used for both business and personal reasons, only the business portion can be claimed.
   • Public Transport: Costs for trains, buses, taxis, and flights for business purposes can be claimed.

3. Staff Costs:

   • Salaries and Wages: Payments to employees, including bonuses and pensions, are deductible.
   • Training: Costs of courses and training directly related to your business.

4. Marketing and Advertising:

   • Advertising Costs: Money spent on advertising, such as print and online ads, social media promotions, and website maintenance, is deductible.
   • Promotional Items: Business cards, flyers, and promotional gifts can be claimed.

5. Professional Fees:

   • Accountants and Solicitors: Fees paid to accountants, solicitors, surveyors, and other professional advisers.
   • Bank Charges: Business bank charges, interest on business loans, and overdraft fees.

6. Subscriptions and Memberships:

   • Trade and Professional Memberships: Subscriptions to trade bodies or professional organisations related to your business.
   • Magazines and Journals: Industry-specific magazines and journals that keep you updated on your field.

7. Equipment and Tools:

   • Computers and Software: Purchases of computers, printers, and necessary software.
   • Machinery and Tools: Any machinery or tools needed to carry out your business operations.

What You Can’t Claim:

1. Personal Expenses:

   • Private Use of Goods: Any costs incurred for personal use, even if they’re business-related items.
   • Entertainment: Entertaining clients, suppliers, or customers. This includes food, drinks, and hospitality events.

2. Fines and Penalties:

   • Traffic Fines: Any fines incurred from breaking the law, such as speeding tickets, cannot be claimed.

3. Repayment of Loans:

   • Capital Repayments: While you can claim interest on business loans, the repayment of the loan capital itself is not deductible.

4. Clothing:

   • Everyday Clothing: General workwear or clothing even if bought for work. However, protective clothing necessary for the job (like safety helmets or boots) can be claimed.

5. Non-Business Related Subscriptions:

   • Personal Subscriptions: Subscriptions to gyms, golf clubs, or other leisure memberships, even if you entertain clients there.

6. Assets over Time:

   • Depreciation: You can’t claim depreciation on assets. However, you can claim for capital allowances instead.

Key Tips for Claiming Expenses: 

• Keep Detailed Records: Maintain thorough records and receipts for all business expenses.
• Separate Business and Personal Finances: Use separate bank accounts and credit cards for business and personal transactions to avoid confusion.
• Consult an Accountant: Always seek advice from a professional accountant to ensure you’re compliant with the latest tax rules and making the most of your allowable expenses.

By understanding and correctly applying these guidelines, you can ensure that you’re claiming all the business expenses you’re entitled to, helping to reduce your overall tax bill and improve the financial health of your business.

Contact us today if you have any questions about your business expenses and how we can help.