Industry News - 16th September 2026
When you’re busy running a business, keeping track of every receipt and payment can easily fall to the bottom of your to-do list.
But if you don’t record your allowable business expenses, you might end up paying more tax than you need to.
If you’re a sole trader or in a business partnership, allowable expenses lower the profit you pay tax on. For example, if your business makes £40,000 and you have £10,000 in allowable expenses, you’d usually work out your taxable profit as £30,000.
The key is knowing which costs you can claim and keeping the records to back them up.
🔍 What is an allowable business expense?
In general, an allowable expense is a cost you pay to run your business.
The expense must be for your business, not for personal use. If you use something for both, you can usually claim only the business portion.
Allowable expenses depend on your type of business, but there are some common areas to look at.
🖇️ Office and administrative costs
You can often claim everyday costs needed to run your business, such as:
✅ Stationery and printing
✅ Postage
✅ Telephone and internet bills
✅ Business software and subscriptions
✅ Accountancy and professional fees
✅ Bank charges on a business account
If you use your personal phone or internet for both work and personal reasons, only claim the part that’s for your business.
🚗 Business travel
Travel costs can soon add up when you’re working away from your usual place. If you travel to meet clients, go to appointments, or visit a temporary workplace, you may be able to claim for things such as:
✅ Fuel
✅ Parking
✅ Public transport
✅ Hotel accommodation for qualifying business trips
✅ Vehicle insurance and repairs, where applicable
You usually can’t claim for your normal commute or for the personal part of any trip.
When claiming vehicle costs, you can either calculate the actual business running costs or, if you qualify, use HMRC’s simplified mileage rates.
📣 Advertising and marketing
You can usually claim the cost of promoting your business as an allowable expense.
This might include:
✅ Website hosting and maintenance
✅ Online and social media advertising
✅ Printed leaflets and brochures
✅ Directory listings
✅ Free samples
✅ Email marketing software
But client entertaining and event hospitality are usually not allowed, even if you think they help your business.
👥 Staff Expenses
If you’re self-employed, a sole trader, or in a business partnership, you can claim allowable business expenses for things like:
✅ Salaries
✅ Bonuses
✅ Employer’s National Insurance
✅ Pension contributions
✅ Employee benefits
✅ Agency fees
✅ Subcontractors
✅ Staff training related to the business
The rules don’t cover personal or household help, like paying a nanny or carer.
If you’re a sole trader, payments to yourself aren’t an allowable business expense because they count as drawings from the business.
📦 Stock and materials
You can usually claim for things you buy to resell or use to provide your products and services, such as:
✅ Stock
✅ Raw materials
✅ Packaging
✅ Costs directly connected with producing goods
Handle personal purchases and goods taken from the business for private use separately.
🏢 Business premises
If you rent or work from business premises, you may be able to claim costs like:
✅ Rent
✅ Business rates
✅ Electricity and heating
✅ Property insurance
✅ Security
✅ Repairs and maintenance
Buying a building or premises isn’t treated as a normal business expense, but different tax rules might apply.
🏠 Working from home
If you often work from home, you may be able to claim part of costs like:
✅ Heating and electricity
✅ Council Tax
✅ Rent or mortgage interest
✅ Internet and telephone use
You’ll need to use a fair way to split these costs between business and personal use. This could be based on how many rooms you use for work and how much time you spend in them.
Alternatively, if you qualify as a sole trader or partnership, you might be able to use HMRC’s simplified expenses. These use flat rates based on how many hours you work from home each month, so you don’t have to work out the business part of every bill.
HMRC also has a simplified expenses checker to help you compare your options.
🎓 Training and development
You can claim for training that updates your current knowledge or helps you build skills for your business.
This can include training that:
✅ Keeps your knowledge up to date
✅ Improves skills used in your existing business
✅ Supports changes in your industry
✅ Helps you use new technology connected with your work
You usually can’t claim for training that lets you start a new business or move into a different field.
💻 Equipment, machinery and vehicles
How you claim tax relief for equipment, machinery, and business vehicles depends partly on which accounting method you use.
If you use traditional accounting, you might need to claim capital allowances instead of treating the purchase as a normal business expense.
If you use cash-basis accounting, you can usually claim most equipment you buy and keep for the business as a normal expense. But cars are often treated differently and may qualify for capital allowances.
You can find more information on the GOV.UK website – Expenses if you’re self-employed.
⚖️ What if an expense has both business and personal use?
You can only claim the business portion.
For example, if your mobile phone bill is £50 per month and half of its use relates to your business, you may be able to claim £25 as an allowable expense.
Use a fair and reasonable way to work it out, and keep a note of how you calculated the business part.
If you can’t clearly separate the business cost from the personal cost, you might not be able to claim it.
🧾 The £1,000 trading allowance
If your yearly gross trading income is £1,000 or less, you might be able to use the tax-free trading allowance. If your income is over £1,000, you may be able to deduct the allowance from your gross trading income instead of claiming actual business expenses.
But you can’t use the trading allowance and claim actual allowable expenses for the same trading income. Compare both options before you decide.
📁 Keep accurate records
Keeping good records makes it much easier to prepare your tax return and claim the expenses you’re entitled to.
You should keep records of:
✅ Business income and sales
✅ Invoices and receipts
✅ Bank statements
✅ Mileage and business journeys
✅ Calculations used to divide mixed business and personal costs
HMRC may ask for evidence to support the figures in your tax return, so don’t rely only on bank transactions if you have an invoice or receipt.
💡 Perrigo Perspective
We often find that business owners pay for things themselves and forget to put them through the business. It could be a monthly app, a train ticket, or a quick stationery order. One payment might not seem like much, but over a year, they can add up fast.
Check your expenses every month or two while you still remember your purchases. If you’re not sure about something, make a note and ask your accountant instead of leaving it out.
For anything used for both personal and business reasons, only include the part that’s for your work.
📞 Could you be missing valuable business expenses?
Small expenses can really add up over the year. If you’re not sure what you can claim or think you might have missed something, the Perrigo team can help you review your costs.
We’ll look over your expenses, answer your questions, and help make sure you’re getting all the tax relief you can.
Give us a call on 01229 488860 or book a FREE discovery call below.
