Professional Financial Advice

Fully Allowable Business Expenses

These costs are purely for business expenses. This means when you incur these expenses through the company, you can usually claim VAT and lower your corporation tax.

Some of the costs you can claim as allowable expenses include:

• Office costs
• Travel and mileage for business purposes
• Clothing expenses (staff uniform)
• Staff costs
• Things you buy to sell on
• Cost of your business premises
• Advertising/marketing

These expenses must be solely for business purposes. However, you may be eligible to claim part-expenses for things you use for both business and personal reasons. There are different rules for self-employed individuals, partnerships, and limited companies.

Professional Financial Advice

Mistakes to Avoid when Claiming Expenses

Incorrect expense claims can lead to penalties, interest charges or HMRC audits. Understanding what qualifies as an allowable expense and how to record it properly can help you avoid compliance issues.

Only costs that are exclusively for business use can be claimed. Personal spending on things such as meals, clothing, or non-business travel cannot be claimed. Additionally, not all business-related costs are allowable. An example of this is everyday clothing and travel to your usual workplace cannot be deducted.

When claiming expenses, you must ensure accurate record-keeping. Receipts, invoices or digital records are evidence for your claim. Under Making Tax Digital, digital record-keeping is becoming mandatory. If you fail to keep proper records, HMRC may reject expense claims, impose penalties, charge interest on late or underpaid payments, or conduct compliance checks.