The general rule

You can deduct legitimate business expenses from your income before calculating the tax you owe, provided they're "wholly and exclusively" for business purposes. Personal expenses, or the personal portion of a mixed-use cost, generally can't be claimed.

Common allowable expenses

  • Office costs — stationery, phone and internet bills (business proportion), software subscriptions
  • Travel costs for business purposes — fuel, public transport, parking (not ordinary commuting to a single regular workplace)
  • Stock and raw materials used in your business
  • Staff costs, if you employ anyone
  • Professional fees — accountancy, legal costs relating to the business
  • Marketing and advertising costs
  • Insurance relevant to your business

Mixed-use expenses

Where something is used partly for business and partly personally — a phone, a car, or working from home — you can generally only claim the business-use proportion, calculated on a reasonable, consistent basis (such as the proportion of miles driven for business, or rooms/hours used for work at home).

The simplified expenses option

Rather than calculating exact costs for things like vehicle use or working from home, HMRC offers simplified flat-rate allowances based on mileage or hours worked from home, which can be considerably easier to track and defend than itemising every actual cost — though it doesn't always produce the largest possible deduction, so it's worth comparing against actual costs if the difference could be significant.

Record-keeping

Keep receipts, invoices and a clear log of what each expense was for — HMRC can ask to see evidence for several years after you file, and claims without supporting records can be disallowed on inspection. Basic accounting software or even a well-organised spreadsheet, updated regularly, saves considerable stress compared with reconstructing a year's expenses from memory in January.

Key takeaways

  • Expenses must be wholly and exclusively for business purposes to be claimed.
  • Mixed-use costs can usually only be claimed proportionally for business use.
  • Simplified flat-rate expenses can reduce admin, but aren't always the largest deduction available.
  • Keep organised records and receipts — HMRC can request evidence years later.