HMRC Allowable Expenses – What You Can Claim and How to Save on Tax

Did you know many of the things you spend on every day could lower your tax bill? HMRC lets businesses claim a wide range of costs as "allowable expenses". The trick is knowing what qualifies and keeping the right paperwork.

Common Allowable Expenses

Most of the expenses that keep your business running are eligible. Think of things like rent for your office, utility bills, and phone charges. If you buy a laptop or a piece of machinery that you use for work, the purchase price (or a portion of it) can be deducted.

Travel costs are another big area. A fuel receipt for a business trip, train tickets, or even parking fees can be claimed. Just make sure the journey is for work – personal trips don’t count.

Staff costs are also deductible. Salaries, wages, bonuses, and even employer‑paid pension contributions fall under allowable expenses. If you provide meals or accommodation for employees while they’re on a business trip, those costs are usually allowed too.

Marketing and advertising spend – whether you pay for a Google ad, design a flyer, or sponsor a local event – can be claimed. Even professional fees like accountant or solicitor charges are included, as long as they relate to your business.

One area that trips people up is home office expenses. If you work from home, you can claim a proportion of your mortgage or rent, council tax, heating, and broadband. The proportion is based on the amount of space used for work and the number of hours you spend there.

How to Keep Proper Records

The easiest way to stay on the right side of HMRC is to keep clear records. Every receipt, invoice, or bank statement that shows a business‑related purchase should be saved. Digital copies are fine – just make sure the file is readable and the date is clear.

Use a simple spreadsheet or accounting software to log each expense. Include the date, the supplier, what you bought, and why it was needed for the business. This not only helps you at tax time, but also makes it easier to spot any unnecessary spending.

If you’re claiming mileage, keep a mileage log that notes the start and end points, the purpose of the trip, and the miles driven. HMRC provides a standard mileage rate, so you don’t need to keep fuel receipts for every journey, but you do need the log.

When it comes to capital purchases like equipment, you may need to claim depreciation over several years instead of the full cost at once. Your accountant can advise whether you should use the Annual Investment Allowance (AIA) to write off the whole amount in the year you buy it.

Finally, set a reminder to review your expenses quarterly. A quick check every three months can catch missing receipts, correct any classification errors, and keep your tax estimate accurate.

Bottom line: knowing which costs HMRC allows and staying organized can shave a sizable amount off your tax bill. Start by listing the everyday items you spend on, match them to the categories above, and keep solid records. In a few months you’ll see the difference when you file your return – and your profit margin will look a lot healthier.