What Expenses Can I Claim as a Deduction?

 Why Claiming the Right Expenses Matters

When it comes to paying tax, knowing what you can (and can’t) claim as a business expense makes a big difference.

Claiming legitimate costs reduces your taxable profit, meaning you pay less tax — and often less National Insurance too. But it’s easy to miss out on deductions or claim incorrectly, especially if you’re new to self-employment or running a limited company.

In this post, we’ll break down common allowable expenses, what records you need to keep, and how to avoid the common pitfalls.

 What Are “Allowable Expenses”?

Allowable expenses are costs that are “wholly and exclusively” for the purpose of running your business.

That means:

• They must be necessary for your business
• You can’t claim personal expenses
• If something is used for both business and personal use, you can only claim the business portion

 HMRC is strict on this — but also fair. If you have the receipts and your explanation is reasonable, you’re usually safe.

 Common Business Expenses You Can Claim

Here’s a breakdown of the most frequently claimed business expenses:

 1. Office & Workspace Costs

• Rent or home office allowance
• Council tax (home office portion)
• Office furniture (desk, chair, shelves)
• Stationery and postage
• Printer ink, paper, business cards

 If working from home, you can use HMRC’s flat rate or claim a portion of actual bills (based on usage or square footage).

 2. Utilities & Subscriptions

• Phone bills (business use only)
• Broadband (business share)
• Software subscriptions (e.g. Microsoft 365, Adobe, Xero)
• Domain names and website hosting
• Business insurance (e.g. professional indemnity)

 3. Travel & Mileage

• Business mileage (45p per mile for the first 10,000 miles, then 25p)
• Train, bus, taxi fares for work trips
• Parking charges
• Hotel stays for business
• Meals while travelling overnight

 You can’t claim for commuting between home and a regular workplace — that’s personal travel in HMRC’s eyes.

 4. Staff & Subcontractors

• Employee wages and bonuses
• Employer’s National Insurance
• Pensions
• Freelancers and subcontractors
• Staff training and development

 5. Marketing & Advertising

• Website development
• Paid social media or Google ads
• Flyers, signs, business cards
• PR or marketing consultants

 6. Professional Fees

• Accountant fees (yes, including us!)
• Legal advice
• Consultancy fees
• Business bank charges

 7. Equipment & Capital Allowances

• Computers, laptops, phones
• Tools and machinery
• Office fit-outs

Some items count as capital assets, and instead of claiming the full cost, you claim capital allowances — we’ll guide you through this.

 Working From Home: What Can I Claim?

Many sole traders and directors work from home, and yes — you can claim a portion of your home expenses.

Two options:

1. HMRC Flat Rate (no receipts needed)

• £10 to £26 per month depending on hours worked

1. Actual costs (you’ll need to justify % used for business)

• Claim a portion of:
• Rent or mortgage interest
• Council tax
• Gas, electricity, water
• Internet and landline

We’ll help you decide which method gives you the best outcome.

 Can I Claim for My Car?

Yes — if you use your car for business purposes.

You can choose:

• Simplified expenses (HMRC mileage rates)
• Actual costs (fuel, insurance, repairs — apportioned for business use)

Important: You must keep a mileage log if you’re using mileage.

 You can’t claim for buying the car unless it’s a business vehicle — then you may be able to claim capital allowances.

 What You Can’t Claim

Some costs are either not allowed or need careful treatment:

 Personal clothing (except uniforms or safety gear)
 Client entertainment (even meals!)
 Fines or penalties (e.g. parking tickets)
 Your own salary (sole traders only)
 Food and drink (unless travelling overnight or with staff)

 Rule of thumb: If it’s something you would buy or use in your personal life anyway, you probably can’t claim it.

 Do I Need Receipts for Everything?

Yes — or at least a record.

• Keep digital or physical receipts
• Scan into accounting software (e.g. Xero, QuickBooks)
• Keep records for at least 6 years
• For mileage, log date, distance, reason, and location

Even for small claims, HMRC may ask for backup if you’re investigated.

 Common Questions from Merranti Clients

 I bought a laptop before I registered — can I claim it?

Yes, if it was for the business and you can prove it. You can backdate pre-trading expenses up to 7 years.

 I use my personal phone — can I claim part of the bill?

Yes, you can claim a proportion for business use. Just be fair and consistent.

 Can I claim for lunch when I meet a client?

Not unless it’s part of staff subsistence or you’re travelling overnight. HMRC is strict on this one.

 Summary: What You Can (and Can’t) Claim

 Final Thoughts: Claim What’s Yours — But Keep It Clean

Claiming business expenses correctly is one of the easiest ways to reduce your tax bill — but only if it’s done right.

At Merranti, we help our clients:

• Identify everything they’re eligible to claim
• Keep clean, digital records
• Avoid red flags that attract HMRC attention
• Maximise savings and stay compliant

 Speak to Merranti for Your Expense Review

Want to make sure you’re claiming everything you’re entitled to?

 Book a call and let’s review your expenses — it could save you hundreds or even thousands in unnecessary tax.