Allowable expenses: what your business can claim in 2026/27

The golden rule for HMRC allowable expenses: wholly and exclusively

What can I claim as a business expense? HMRC allows a cost only if it is incurred wholly and exclusively for the business. That single phrase decides almost every question about HMRC allowable expenses: your accountant’s fees pass the test, your gym membership does not, and a laptop used for both work and Netflix sits in the grey zone in between.

For mixed-use costs the answer is usually apportionment. Can I claim my phone as a business expense? Yes, the business share of it: where a cost has an identifiable business part, such as your phone bill or your car, you claim that share and keep a note of how you worked it out. Records are what turn a defensible claim into an easy one.

Working from home

Working from home tax relief comes two ways: HMRC’s flat rate, which is simple but modest, or a calculated share of your actual household costs such as heating, electricity, broadband and rent, based on the rooms you use and the hours you work in them.

The calculated method usually gives a bigger working from home tax relief claim for anyone at their desk most of the week, and it is less work than it sounds when your records are digital. We run the comparison for every client rather than defaulting to the flat rate.

Travel and mileage

Travel expenses are tax deductible for the self employed and for companies alike: trips to clients, suppliers and temporary workplaces, plus parking and tolls along the way. Ordinary commuting to a regular workplace is not, and that line catches more people than any other travel rule.

Can I claim mileage? If you use your own car for business, yes, and the simplest route is HMRC’s approved mileage rate rather than actual running costs.

The calculator below adds up your mileage and other allowable expenses and shows the tax you could save at your band.

Equipment and software

Computers, tools, machinery and office furniture bought for the business are claimable through capital allowances, in most cases in full in the year you buy them, which is where capital allowances for a small business do the most work. Software subscriptions, cloud accounting fees, website costs and professional subscriptions to trade bodies are all tax deductible expenses too.

Where an item has personal use as well, claim the business proportion. And keep the receipts digitally: with Making Tax Digital arriving for many businesses, photographed receipts in your bookkeeping software are the standard we set every client up with. The rules for allowable expenses for a limited company and for the self employed differ in the detail, so we check each claim against the right set.

The mistakes we see most

The most expensive mistake is not over-claiming, it is under-claiming. Home-working costs left at the flat rate, business mileage never logged, phone bills treated as personal, and pre-trading costs forgotten entirely, even though costs from before you started trading are usually claimable. Claiming expenses as a sole trader is where we see the most left on the table.

The second is poor records. A valid expense with no receipt and no note is a claim you may not be able to defend. Good bookkeeping quietly fixes both problems, which is why it pays for itself, and it feeds straight into tax planning through the year. Unsure how this applies to you? Get in touch.