Which Expenses Can I Claim? A Guide for UK Sole Traders, Limited Companies, and Landlords

One of the most effective ways to reduce your tax bill is by claiming all the allowable business expenses you’re entitled to.

The challenge?
Many business owners aren’t sure exactly what they can claim — and HMRC’s rules can be tricky. Some expenses are obvious, others fall into a grey area, and a few are commonly overclaimed (leading to HMRC enquiries).

This guide will help you understand what you can claim — and how to stay compliant.

The Golden Rule: ‘Wholly and Exclusively’

HMRC’s basic test for whether an expense is allowable is simple in theory:

The expense must be incurred wholly and exclusively for the purpose of your trade, profession, or property business.

That means:

• It must be directly related to running your business
• It can’t have a significant personal element (unless the personal part is clearly separated)

If there’s a mixed use — like using your mobile phone for work and personal calls — you can only claim the business portion.

Common Allowable Expenses for Sole Traders & Limited Companies

Here are some of the most common categories where you can claim costs.

1. Office and Stationery Costs

• Office rent
• Business rates (if applicable)
• Utilities for your business premises
• Stationery, printing, and postage
• Computer software subscriptions
• Cloud storage and apps used for work

Tip: If you work from home, you may be able to claim a proportion of household bills (more on that below).

2. Travel and Subsistence

You can claim travel costs when they are for business purposes only.
Examples:

• Train, bus, or taxi fares
• Mileage (using HMRC’s approved rates: 45p per mile for the first 10,000 miles, 25p thereafter)
• Parking fees and tolls
• Hotel stays when travelling for business
• Meals when you’re travelling for work (not your daily lunch from the office fridge!)

Important: Ordinary commuting (home to your regular workplace) is not allowable.

3. Motor Vehicle Costs

If you use a vehicle for business:

Sole traders can claim either:

• Mileage rates (simple method), or
• Actual running costs (fuel, insurance, repairs, tax, MOT) proportionate to business use

Companies can either:

• Pay you mileage for business travel in your personal car
• Provide a company car (though this can be less tax-efficient due to benefit-in-kind charges)

4. Staff and Subcontractor Costs

• Employee salaries and wages
• Employer’s National Insurance
• Pension contributions
• Training costs
• Agency and subcontractor fees

5. Professional Fees

• Accountancy and bookkeeping
• Legal fees related to the business
• Consultancy services

Note: Legal fees for buying property or other capital assets are not immediately deductible but may be allowable against Capital Gains Tax later.

6. Marketing and Advertising

• Website design and hosting
• Social media advertising
• Google Ads
• Flyers, business cards, and promotional materials
• Networking event fees

7. Insurance

• Public liability
• Professional indemnity
• Employers’ liability
• Business contents insurance

8. Training

Training is allowable if it’s to:

• Improve skills you already use in your business
• Keep your knowledge up to date

Training for new skills unrelated to your current business is not deductible.

9. Banking and Finance Costs

• Bank charges on business accounts
• Credit card charges
• Loan interest
• Leasing costs

Expenses If You Work From Home

If you run your business from home, you can claim part of your household costs.

You have two options:

1. Simplified Flat Rate

HMRC’s flat rate is based on the hours you work from home each month:

• 25–50 hours: £10/month
• 51–100 hours: £18/month
• 101+ hours: £26/month

2. Proportional Method

Work out the business portion of:

• Rent or mortgage interest
• Council tax
• Gas, electricity, water
• Internet and phone

This is usually based on the number of rooms used for business and the time spent working in them.

Capital Allowances: Claiming for Larger Purchases

Some expenses are classed as capital assets — things you keep and use over several years, like:

• Computers
• Machinery
• Office furniture
• Tools
• Vehicles

Instead of claiming them as an immediate expense, you claim capital allowances to deduct the cost over time.

The most common is the Annual Investment Allowance (AIA), which lets you deduct the full cost of qualifying items up to £1 million per year.

Special Rules for Landlords

If you have rental properties, the rules are slightly different.

Allowable Expenses Include:

• Letting agent fees
• Repairs and maintenance (but not improvements)
• Insurance
• Utilities (if paid by you)
• Council tax (if paid by you)
• Replacement of domestic items (like carpets, furniture, appliances)
• Interest on buy-to-let mortgages (restricted to a 20% tax credit for individuals)

Important: Capital improvements (like adding an extension) are not deductible against rental income, but they may reduce Capital Gains Tax when you sell.

Expenses You Cannot Claim

HMRC is strict about certain costs.
You cannot claim:

• Personal expenses (holidays, clothes, meals not related to travel)
• Client entertainment (e.g. tickets to events, sporting hospitality)
• Fines and penalties
• Loan capital repayments
• Depreciation (use capital allowances instead)

Keeping Records for HMRC

To claim expenses, you must:

• Keep receipts, invoices, and statements for 6 years (for companies) or 5 years after 31 January of the tax year (for sole traders)
• Keep digital records if required under Making Tax Digital
• Separate personal and business spending

Poor record-keeping is one of the biggest causes of HMRC disputes — and lost tax relief.

Merranti’s Tip: Claim Everything You’re Entitled To — Legally

Many business owners either:

• Overclaim (risking penalties), or
• Underclaim (paying more tax than necessary)

The safest approach is to:

• Understand the rules
• Keep clear records
• Get professional advice for any grey areas

Need Help Maximising Your Allowable Expenses?

At Merranti Accounting, we help:

• Sole traders
• Limited company directors
• Landlords and property investors

…to claim all the expenses they’re entitled to, while staying fully compliant with HMRC rules.

We’ll review your accounts, identify missed claims, and ensure you never pay more tax than you should.

Contact Merranti Accounting today to arrange your expense review — and keep more of your hard-earned money.