HMRC's rule for deductible expenses is one sentence: they must be incurred wholly and exclusively for the purposes of the business. The detail underneath that sentence is what trips people up.
Common allowable expenses
- Office costs — rent, utilities at a commercial office. For home offices, only the business proportion (rooms × time, or HMRC's flat-rate simplified expense).
- Travel — to clients and meetings (not your normal commute). Train, bus, taxi, mileage. Hotel + reasonable subsistence if overnight.
- Software, subscriptions, equipment — AccountantUK, design tools, business phone, business laptop.
- Professional fees — accountant, solicitor, business insurance, professional body membership.
- Marketing — website hosting, business cards, ads, networking events (the ticket, not the bar).
- Staff costs — salaries, employer NI, pension, training relevant to the job.
Common gotchas
- Client entertaining — almost never deductible. Food + drink with clients is disallowed for both Income Tax and Corporation Tax, even if clearly business-related.
- Personal use — only the business proportion is deductible. A 70/30 business/personal phone bill is 70% deductible.
- Dual-purpose clothing — daily clothing isn't a business expense, even if bought for a meeting. Branded uniform or PPE is fine.
- Home office — claim a portion of light, heat and broadband by room and hours, OR HMRC's flat-rate simplified expense (£10–£26/mo depending on hours).
- Capital items — bigger purchases (laptop > ~£250, vehicles, large equipment) usually need capital allowances rather than a straight expense. Track these in Capital allowances in the Tax menu.
When in doubt
HMRC's BIM manual is the authoritative source and more readable than it sounds. For specific questions, ask your accountant via a support ticket — that's exactly what the accountant routing is for.