Can I Claim That as a Business Expense? A Simple Guide for UK Business Owners
“Can I put that through the business?”
It has to be one of the questions accountants hear most often.
And unfortunately, the answer isn’t always a straightforward yes or no.
Some costs are clearly business expenses. Others depend on what you bought, why you bought it, how you use it and whether there is any personal use involved.
Getting expenses right matters because allowable business expenses can reduce the profit you pay tax on.
But claiming something simply because you paid for it from your business bank account doesn’t automatically make it allowable.
Here are some of the common expenses we get asked about.
Office costs
If you’re self-employed, everyday office costs can usually include things such as:
- Stationery
- Printing
- Postage
- Printer ink
- Business software
- Small office items
Larger equipment such as computers and printers can also qualify for tax relief, although how the cost is treated can depend on the accounting method you use.
The important point is that the expense needs to relate to the business.
Mobile phones and internet
This one isn’t always quite so straightforward.
If your phone or internet is used entirely for business, it can be fairly simple. But if you use the same one for work and personal use, you may only be able to claim the business part.
Not sure if it counts? Just ask us.
Working from home
Working from home? If you’re self-employed, you may be able to claim some of the household costs linked to running your business.
That could include elements of heating, electricity, internet and other household expenses, depending on the circumstances.
Sole traders and partnerships may also be able to use HMRC’s simplified expenses instead of calculating the actual business proportion of certain costs.
Simplified expenses are available for areas including working from home and vehicle use.
The rules are different for employees working from home. We recently covered the changes in more detail in our blog, Working from home tax relief has changed – what employers and employees need to know.
Business travel and mileage
Travel that is genuinely for business purposes may be allowable.
For example, travelling to visit a customer, supplier or temporary place of work may qualify.
Ordinary travel between your home and your normal place of work generally does not.
If you use your own car for business, you may be able to claim mileage for those journeys.
Just keep a note of where you went, why the journey was for work and how many miles you travelled.
If you run a limited company and are considering buying or leasing a vehicle through the business, have a read of our guide to buying a car or vehicle through your limited company, as the tax treatment can be quite different.
Meals while you’re working
Buying lunch while you’re working does not automatically make it a business expense.
There are circumstances where food and drink bought while travelling for business may qualify, but your normal everyday meals generally do not suddenly become allowable because you happen to be working at the time.
This is one of those areas where the circumstances matter, so check before claiming.
Clothing
This catches people out quite regularly.
Normal clothing generally isn’t allowable just because you wear it for work.
However, certain specialist clothing may qualify, such as protective clothing or a genuine uniform.
So a builder’s protective equipment is very different from buying a new coat because you want to look smart when meeting clients.
Training and professional development
Training costs may be allowable where they relate to your existing trade or help you maintain or improve skills you already use in your business.
The position can be different if the training is designed to give you an entirely new skill or allow you to start a different type of business.
Again, this is an area where the detail matters.
Professional fees and subscriptions
Business-related professional costs can often be claimed.
For self-employed businesses, HMRC lists certain accountancy, legal and other professional fees as allowable expenses where they are incurred for business reasons.
Relevant professional subscriptions may also qualify in some circumstances.
Equipment
If you’re buying equipment for the business, you may be able to get tax relief on the cost.
Exactly how it’s treated will depend on what you’ve bought and how your accounts are prepared, as larger purchases can be treated differently from your everyday business costs.
If you’re planning a bigger purchase, it’s worth checking with us first.
Keep the receipt
Even when something is a genuine business expense, you still need to keep a record of it.
That means keeping track of what you’ve spent, what it was for and holding on to the paperwork to back it up.
That is why getting into the habit of recording expenses as you go is so useful.
Snap the receipt.
Upload it.
File it.
Done.
Much easier than trying to remember six months later why you spent £47.83 somewhere you’ve never heard of.
And remember: sole traders and limited companies aren’t the same
The rules can be different depending on how your business is set up.
What a sole trader can claim isn’t always treated in exactly the same way for a limited company or its directors, and there may also be VAT to consider if you’re VAT registered.
So while this is a useful general guide, if you’re unsure about a particular expense, just ask us. We can look at it based on your business and your circumstances.
Not sure? Ask us
The easiest rule isn’t “claim everything” or “don’t claim anything you’re unsure about”.
It’s simply:
Ask.
We’d much rather you check with us than miss an expense you could legitimately claim – or include something that shouldn’t be there.
We’ve also put together a separate guide on What you can and can’t claim on your Self Assessment tax return if you’d like to read a little more.
If you’ve got a receipt sitting in front of you and you’re wondering, “Can I put that through the business?”, send us a message.
Chances are, it won’t be the first time we’ve been asked.
