10 deductible expenses

Understanding which business expenses you can deduct from your taxable income is one of the simplest ways to reduce your tax bill legitimately. Whether you’re a sole trader, partnership, or limited company, HMRC allows you to claim relief on costs that are “wholly and exclusively” for business purposes. We’ve put together this guide to ten common deductible expenses that many business owners overlook—potentially leaving money on the table at Self Assessment or Corporation Tax time.

Office and workspace costs

If you work from home, you can claim a simplified allowance of £26 per week (£1,352 per year) without needing detailed records. Alternatively, you can claim actual costs: a proportion of your rent or mortgage interest, council tax, utilities, and insurance. For those renting a dedicated office or studio, the entire rent is deductible, along with business rates, maintenance, and cleaning. Keep receipts and invoices to evidence these claims—HMRC is particularly keen on home office claims, so clarity helps if you’re ever selected for enquiry.

Professional fees and subscriptions

Accountancy fees, legal advice, and professional body memberships directly related to your trade are all deductible. This includes your annual fees to chartered institutes, insurance bodies, or trade associations. However, note that fees for personal tax advice (like preparing your Self Assessment return) are not deductible—only costs relating to your business are eligible. If you’re unsure whether a particular subscription qualifies, err on the side of caution and ask your accountant.

Equipment and tools

Most equipment purchases can be claimed as capital allowances rather than direct expenses. For items costing under £1,000, you can use the “small pool” allowance—meaning they qualify for 100% first-year allowance in the year of purchase. Items over £1,000 typically enter the main pool and receive an 18% annual allowance. Computers, machinery, vehicles, and furniture all fall into this category. Keep invoices and evidence of business use, particularly for mixed-use items like vehicles or laptops.

Marketing, advertising, and website costs

Any spend on promoting your business is deductible: Google Ads, social media advertising, printed materials, website design, domain registration, and hosting fees. If you employ a marketing consultant or agency, their invoices are fully deductible. However, a word of caution: ensure your website isn’t classified as a capital asset. If you’ve paid for a bespoke website build costing several thousand pounds, HMRC may view this as a capital expense rather than revenue, meaning you’d claim capital allowances instead.

Stationery, postage, and communications

Day-to-day running costs are readily deductible: printer ink, paper, envelopes, postage stamps, and telephone bills (including your business mobile). If you have a home office and share a landline with personal use, apportion the business percentage. Similarly, broadband costs can be claimed proportionately if it’s partly personal. These are modest claims individually, but they add up significantly over a year.

Wages, contractors, and subcontractors

Employee salaries and Employer’s National Insurance are fully deductible. If you pay contractors or freelancers, their invoices are deductible too—though you’ll need to ensure correct IR35 classification and issue them with a Self Assessment tax code if required. Sole traders cannot claim their own wages, but partners in a partnership can claim drawings up to their profit share.

Training and development

Courses, workshops, and professional training directly related to your trade are deductible. This extends to books, online courses, and industry conferences. However, training for a completely different career isn’t allowable—HMRC expects the training to sharpen existing skills or maintain professional competence in your current field.

Travel and subsistence

Business mileage in your own vehicle is claimable at the fixed rate of 45 pence per mile (for the first 10,000 miles) and 25 pence thereafter, per tax year. If you own a business vehicle, fuel, insurance, maintenance, and road tax are fully deductible. Hotel accommodation and meals whilst on business trips are deductible, though extravagant dining isn’t encouraged. Commuting between home and your usual workplace, however, isn’t deductible—only travel between different work locations counts.

Getting it right

Claiming deductions is straightforward if you keep good records. Use invoices, receipts, and bank statements to support every claim. If you’re unsure whether an expense qualifies, it’s worth asking—HMRC publishes detailed guidance on its website, and your accountant can advise on borderline cases.

For tailored advice, contact Severn Accounting—we’re here to help.