Are You Claiming All the Business Expenses You’re Entitled To?

01 May Are You Claiming All the Business Expenses You’re Entitled To?

Let’s be honest: nobody likes paying more tax than they absolutely have to. But every year, I see small business owners and freelancers hand over more of their hard-earned cash to HMRC than necessary, simply because they aren’t claiming for everything they’re entitled to.

It’s not usually because they’re trying to be overly cautious. More often than not, it’s because the rules around "allowable expenses" can feel like a bit of a minefield. What counts? What doesn't? And where is the line between a savvy deduction and an inquiry-triggering mistake?

As we move into the 2026/27 tax year, staying on top of your bookkeeping is more important than ever: especially with the rollout of Making Tax Digital (MTD) for Income Tax. At Harrison’s Accountancy, we want to make sure you’re keeping as much of your profit as possible while staying firmly on the right side of the law.

Here’s our guide to the commonly missed expenses you should be looking out for.

The Golden Rule: "Wholly and Exclusively"

Before you claim a single penny, you need to understand the fundamental rule of business expenses.

HMRC’s mantra is that an expense must be incurred "wholly and exclusively" for the purposes of your trade. If you buy a laptop that you use 100% for your business, it’s a clear-cut expense. If you buy a laptop and your kids use it for Minecraft 50% of the time, things get a bit more complicated.

In cases where there is a "dual purpose," you can usually only claim for the business proportion of the cost. If you can’t clearly separate the business part from the personal part, HMRC may disallow the entire claim. This is why we always recommend keeping detailed records: it makes our lives (and yours) much easier when it comes to Self Assessment.

1. Working from Home: The Hidden Costs

Are you still ignoring the extra heat, light, and broadband you use to run your business?

If you’re a sole trader or a limited company director working from home, you are using your domestic resources to generate profit. You have two main ways to claim this back:

The Simplified Method (Flat Rate)

This is the "no-headache" option. As of 2026, sole traders can claim a flat rate based on the number of hours they work from home each month. It’s a simple calculation that doesn't require you to squirrel away every single utility bill.

• 25–50 hours: £10 per month
• 51–100 hours: £18 per month
• 101 hours or more: £26 per month

The Actual Cost Method

If you have a dedicated office space or high energy usage, the flat rate might leave money on the table. You can calculate the proportion of your actual bills: including rent, mortgage interest (but not capital), Council Tax, heating, lighting, and even minor repairs.

To do this, you’ll usually divide the number of rooms in your house by the one you use for work, and then factor in the percentage of time you use it. It’s more work, but for many of our clients, it results in a much higher deduction.

2. On the Road: Mileage and Travel

Don't just track the "big" trips; every mile counts towards your tax bill.

If you use your personal vehicle for business (excluding your commute to a permanent place of work), you can claim mileage. For the 2026/27 tax year, the HMRC approved rates remain a great way to offset your costs:

• Cars and Vans: 45p per mile for the first 10,000 miles, and 25p thereafter.
• Motorcycles: 24p per mile.
• Bicycles: 20p per mile.

Many people forget that they can also claim an additional 5p per mile if they are carrying a passenger who is also an employee or business associate on the same business trip.

If you use a dedicated business vehicle (one owned by the company), you don't claim mileage. Instead, you claim the actual costs of fuel, insurance, repairs, and road tax. If you're unsure which route is better for you, have a look at our bookkeeping services to see how we help clients track these variables.

3. Professional Fees and Subscriptions

Are you paying for memberships out of your taxed income?

This is one of the most frequently missed categories. If you pay a subscription to a professional body or an industry-related magazine, it is usually deductible: provided the body is on HMRC’s "List 3" (the list of approved professional organisations).

This includes:

• Professional indemnity insurance.
• ICAEW or ACCA fees.
• Trade union memberships (if relevant to your job).
• Software subscriptions (Adobe, Xero, Microsoft 365, etc.).
• LinkedIn Premium (if used strictly for business lead generation).

If it helps you do your job or stay compliant, it’s likely an allowable expense. Just make sure the "business use" case is strong.

4. Training and Development

You can't claim for a brand-new career, but you can claim to stay at the top of your game.

HMRC is quite specific here. You generally cannot claim for training that teaches you a completely new skill or sets you up in a new line of business. For example, if you’re a plumber and you take a course in web design, that’s considered a "capital" investment in yourself and isn't a deductible day-to-day expense.

However, if you are a web designer and you take a course to learn a new coding language or a new software update, that is "refreshing" your existing skills and is 100% deductible. Keeping your skills current is a legitimate business cost.

5. Equipment and the "Small Stuff"

A £5 pack of pens is just as valid as a £2,000 MacBook.

We often find that clients are great at telling us about the big purchases: laptops, printers, office desks: but they forget the "petty cash" items. Over a year, stationery, postage, ink cartridges, and small tools can add up to hundreds, if not thousands, of pounds.

For larger items, we use "Capital Allowances." This is a way of claiming tax relief on the cost of equipment you buy to use in your business. With the Annual Investment Allowance (AIA), you can often deduct the full cost of these items from your profits in the year you buy them.

6. The "Grey Areas": Clothing and Food

This is where most people get into trouble, so let's set the record straight.

Clothing

You cannot claim for "everyday" clothes, even if you only wear them for work. If you buy a suit specifically for a big presentation, HMRC argues that the suit has a "dual purpose" (it provides "warmth and decency"). Therefore, it’s not deductible.
What is deductible?

• Uniforms with a permanent logo.
• Protective clothing (PPE, steel-toed boots, high-vis).
• Costumes for actors or entertainers.

Food and Drink

Generally, you cannot claim for your daily lunch. Everyone has to eat to live, so HMRC doesn't see it as a business-exclusive cost. However, you can claim for "subsistence" if you are travelling on a business trip that is outside of your normal routine or involves an overnight stay.

7. Marketing and Website Costs

In 2026, your digital footprint is your shop front.

Everything you spend on marketing is an allowable expense. This includes:

• Website hosting and domain registration.
• SEO services and PPC advertising (Google Ads, Facebook Ads).
• Business cards and brochures.
• Directory listings.

If you are looking to grow your business this year, remember that the government is essentially subsidising your marketing through tax relief. It’s an investment in your Annual Accounts for next year!

Why Honest Framing Matters (The ICAEW Way)

At Harrison’s Accountancy, we pride ourselves on being "straight-talkers." We want you to claim every penny you are legally entitled to, but we will never advise you to "grey the lines" or overclaim.

Why? Because HMRC’s penalty regime is becoming increasingly automated. With the shift to digital records, it is much easier for their systems to spot anomalies. If your "sundry" expenses are significantly higher than the industry average, it flags your account for a closer look.

Being ICAEW-compliant means we follow a strict code of ethics. We help you build a robust, tax-efficient business that can stand up to any audit. It’s about peace of mind: knowing that your profit is real and your tax bill is accurate.

Don't Let Your Records Slide

The biggest barrier to claiming all your expenses isn't the law: it's your filing system. If you lose a receipt, you lose the deduction.

We highly recommend using cloud accounting software like Xero or QuickBooks. These apps allow you to snap a photo of a receipt on your phone the second you get it. No more shoeboxes full of faded thermal paper at the end of the year! If you need help getting set up, our management accounts services can help you get a real-time view of your spending.

Final Thoughts

Are you claiming everything? Probably not. Most people miss the small things: the 20p-per-mile cycle claim, the £6-a-week home office allowance, or the annual fee for a professional body.

If you’re feeling unsure about your current expenses or you’re worried you might be overclaiming (or underclaiming!), let’s have a chat. We work with everyone from sole traders to large firms, ensuring their tax position is as efficient as possible.

Ready to take the stress out of your next tax return?
Explore our Accountancy Services or get in touch with Dan and the team today. We’re here to help you navigate the numbers so you can focus on running your business.