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Don’t Miss Out: Make Sure You’re Claiming All Your Business Expenses

No one wants to pay more tax than necessary — but that’s exactly what can happen if you miss out on claiming allowable expenses when calculating your taxable profit.

As a self-employed individual or sole trader, understanding what you can and can’t claim is essential. Not only will this help minimise your tax bill, it also ensures your business stays compliant with HMRC requirements.

What Counts as an Allowable Business Expense?
The basic rule is simple: you can claim expenses that are incurred wholly and exclusively for the purpose of your trade. There’s no requirement for the expense to be necessary — just that it’s entirely for the business.

If something is used for personal reasons too, that’s where things get a bit more complex.

What You Can’t Claim: Private Expenses
You can’t deduct personal or private expenses when working out your taxable profit. This is why it’s strongly recommended to keep your business and personal finances completely separate. That means using a dedicated business bank account and business credit card.

Even small slip-ups can add up. For example, if you buy office stationery and a magazine in the same transaction, only the cost of the stationery is deductible — not the magazine.

Tempted to sneak private purchases into your accounts? Best to resist. HMRC is thorough, and inaccurate claims can lead to penalties.

Mixed Use Expenses – Claim the Business Portion
Some costs are genuinely split between business and personal use. These are still claimable — but only the business portion.

For example:

If your mobile phone is used 72% for business, you can claim 72% of the bill.

If your car is used for business and personal journeys, it’s usually easier to use simplified mileage rates (45p per mile for the first 10,000 business miles, 25p thereafter).

Keep good records — itemised bills, mileage logs, etc. — and ensure your apportionments are made on a just and reasonable basis.

What About Dual-Purpose Items?
Some expenses are tricky because they serve both business and personal purposes and can’t be separated. These are usually not allowable.

Common examples:

Everyday clothing worn at work (even if only worn at work) is not deductible — it also serves the private purpose of providing warmth and decency.

Reading glasses used for work and personal reading — even if you mostly use them for work — don’t qualify.

✅ However: branded uniforms with a business name or logo are deductible.

Tip: If dual use is unavoidable, consider buying separate items exclusively for business (e.g. a second pair of reading glasses just for work).

Incidental Private Benefit? No Problem.
If a business expense has a minor private benefit, that won’t necessarily make it non-deductible.

Example: You travel to Spain to meet a supplier. You enjoy some sunshine while there — but the trip is clearly for business. In this case, the travel cost is still deductible.

What If You Earn Less Than £1,000?
If your total trading income for the year is less than £1,000, you don’t need to report it to HMRC thanks to the trading allowance. Your income is tax-free and no deduction calculations are needed.

If your income is above £1,000, you can choose to deduct the trading allowance instead of actual expenses, which can be a time-saver if your costs are minimal.

Save Time with Simplified Expenses
To cut down admin, HMRC allows simplified methods for some expenses:

Business mileage: claim using flat mileage rates.

Working from home: claim based on the number of hours worked from home each month.

Living in business premises (e.g., a B&B): apply a flat rate for private use deduction.

Typical Allowable Expenses for Sole Traders and Small Businesses
Here’s a quick snapshot of common deductible expenses — if they’re wholly and exclusively for business:

Office costs (stationery, printing, software)

Phone and internet bills

Travel and parking

Branded uniforms

Goods for resale

Raw materials

Rent and utilities for business premises

Insurance

Advertising and marketing

A Practical Tip
✅ Keep detailed, accurate records of all business expenses throughout the year.
✅ Understand what qualifies as allowable — and what doesn’t.

Staying on top of your expenses not only saves tax but helps you run a smarter, more profitable business.

Need help understanding what you can claim?
At A.D. Pottie & Co Ltd, we work with self-employed professionals and small businesses across the UK to make sure nothing is missed and everything is compliant.

Get in touch today to ensure your next tax return is complete, accurate, and as tax-efficient as possible.