Understanding Business Expenses: A Guide for Sole Traders and Limited Companies
When it comes to running a business, knowing what expenses you can claim can make a big difference in reducing your tax bill. Allowable expenses are costs that are “wholly and exclusively” for the purpose of your trade. Claiming these correctly means you only pay tax on your actual profits—not on money spent to keep your business goin
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Common Allowable Expenses
- Office costs: Stationery, printing, and phone bills
- Travel: Mileage, train fares, parking, and accommodation (not commuting)
- Staff costs: Salaries, bonuses, pensions, and subcontractors
- Marketing: Website, advertising, and social media promotion
- Professional fees: Accountant, legal advice, or business insurance
- Utilities and rent: If you work from a business premises or claim a portion from home
- Subscriptions: Industry-related memberships or online tools
- Training: Relevant courses to improve your business skills
What You Can’t Claim
You cannot claim expenses that are for personal use or mixed-purpose unless you apportion them clearly. For example:
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Personal phone use: You must only claim the business-use percentage.
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Clothing: Only uniforms or protective wear, not everyday clothes.
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Entertaining clients: Not an allowable expense for tax purposes.
