What Expenses Can I Claim to Save Tax in the UK?

A receipt is not automatically a tax deduction. The real question behind “what expenses can I claim to save tax?” is whether the cost was incurred wholly and exclusively for the work or business that earns your income. Get that right and you pay tax on your true profit, not on money that has already gone out the door.

For a self-employed tradesperson, black cab driver, landlord or small company director, the details matter. A missed expense means paying more tax than necessary. An expense that is personal, exaggerated or poorly evidenced can cause trouble if HMRC asks questions. The aim is not to claim everything. It is to claim the right things, with records that stand up.

What expenses can I claim to save tax?

For sole traders and partnerships, allowable expenses usually reduce the profit shown on your Self Assessment tax return. If you earn £60,000 and have £15,000 of genuine allowable costs, you are normally taxed on £45,000 rather than the full £60,000.

The basic test is simple, although applying it is not always: the expense must be for the purpose of your trade. If an item has both business and private use, only the business proportion can be claimed. That is why a clear record of how you calculated the split is just as valuable as the receipt itself.

A limited company works differently. The company can generally deduct costs incurred wholly and exclusively for its business when calculating Corporation Tax. But a director cannot simply put personal spending through the company. Depending on what was paid and why, it could create a benefit in kind, a director’s loan issue, or an expense that the company cannot deduct.

Day-to-day costs that are often allowable

Many common business costs are straightforward where they relate directly to earning income. This includes materials, stock, tools with a short working life, protective equipment, advertising, accountancy fees, business insurance, bank charges, software subscriptions, phone costs and stationery.

For construction subcontractors, this could mean the cost of safety gear, small tools, public liability cover and bookkeeping software. For a cab driver, it may include licence fees, radio or booking-app charges, vehicle cleaning, card payment fees and business-related phone use. For a consultant or small business owner, it may be professional subscriptions, website hosting or software used to run the business.

The key is the business connection. High-visibility workwear, steel-toe boots and branded uniform can be allowable because they are required for the job. Ordinary clothing is usually not allowable, even if you only wear it while working. A suit, jeans or smart shirt still has an everyday private use.

Phone, broadband and working from home

If you use a mobile phone or broadband for both business and private purposes, claim a reasonable business proportion. A sole trader who uses their phone roughly 70% for customers, suppliers and bookings may claim 70% of the relevant cost, provided that estimate is realistic and can be explained.

Working from home can also create an allowable expense. You can use HMRC’s simplified expenses method if it suits your circumstances, or work out a fair share of household costs such as heating, electricity and council tax based on usage. The best method depends on your actual costs and how regularly you work from home. Do not claim the entire household bill because you occasionally answer emails at the kitchen table.

For limited company directors, the arrangement needs more care. There may be a modest homeworking allowance available without detailed records, or the company may reimburse genuine additional household costs. Charging the company rent for using a room at home can have wider tax consequences, so it should not be done casually.

Travel, vehicles and subsistence

Business travel is often a major expense, but it is one of the areas people get wrong most often. Travel between business locations, to a temporary workplace, or to visit customers and suppliers can be allowable. Ordinary commuting between home and a permanent workplace is not.

If you use your own vehicle for self-employment, you normally choose between claiming actual business costs or using HMRC’s approved mileage rates. Mileage is simpler and includes an allowance for fuel, repairs, insurance, servicing and depreciation. If you use mileage, do not also add those running costs separately.

Keeping a mileage log is a sensible habit. Record the date, destination, purpose of the trip and miles travelled. This is particularly useful for tradespeople moving between jobs, landlords visiting properties, and drivers using a vehicle for more than one type of journey.

Meals are not a general deduction just because you are working. The cost of your normal lunch is private. However, reasonable subsistence may be allowed when you are travelling for business or working away from your normal base under the relevant rules. The facts matter, especially where a temporary workplace becomes a long-running arrangement.

Parking for a business visit may be allowable, while parking fines and other penalties are not. The same applies to speeding fines or late-payment penalties: they are a cost to you, but not a tax-deductible business expense.

Bigger purchases and capital allowances

Some purchases are not deducted as normal day-to-day expenses because they are expected to last longer than a year. Examples include machinery, larger tools, computers, office furniture and certain vehicles. Instead, tax relief may be available through capital allowances.

The Annual Investment Allowance often gives many businesses full relief in the year they buy qualifying equipment, but the rules depend on the asset and the business structure. Cars have separate rules, and the rate can depend on their emissions. A van used in a trade is treated differently from a car with substantial private use.

This is a good reason to check before making a large purchase. The commercial decision should come first. Buying an unnecessary £10,000 item just to save tax does not make financial sense when you still have to fund most of the cost yourself.

Expenses landlords should not overlook

Landlords can usually deduct the running costs of letting a property, including letting-agent fees, landlord insurance, repairs, service charges, advertising, accountancy fees and reasonable travel that relates to managing the let.

Repairs restore the property to its existing condition. Improvements add value or provide something significantly better, and are generally treated differently for tax. Replacing a damaged bathroom suite with a similar modern equivalent may be a repair; adding an extension is an improvement. The distinction is not always obvious, so keep invoices and descriptions of the work.

Finance costs need particular care for individual residential landlords. Mortgage interest does not operate as a straightforward deduction in the same way as many other property costs. Instead, relief is generally given as a basic-rate tax reduction, subject to the rules. Limited companies and different types of property can be treated differently.

Costs that commonly cause problems

A few areas deserve extra caution. Client entertaining - such as meals, hospitality or event tickets for customers - is generally not deductible for tax, even when it feels like a genuine business-building cost. Staff entertaining can be treated differently, but there are limits and conditions.

Training is usually allowable when it maintains or updates skills you already use in the business. Training that gives you a new trade or qualification may not be allowable. Legal and professional fees can be deductible where they relate to ordinary trading matters, but not where they are connected with buying a business, changing its structure or other capital work.

For CIS subcontractors, remember that tax deducted by a contractor is not itself an expense. It is tax already paid on your behalf and should be reported correctly on your Self Assessment return. You can still claim your genuine business costs separately, which may increase a refund or reduce the amount left to pay.

Records are what turn expenses into tax relief

Keep invoices, receipts, bank statements, mileage records and notes explaining mixed-use calculations. A photo or scan of a paper receipt is often sensible, provided the information is clear and retained properly. Business banking and accounting software make this easier, but the habit matters more than the app.

If you are VAT registered, expenses are normally recorded net of VAT where you can reclaim the VAT. If you use the Flat Rate Scheme or cannot reclaim VAT on a cost, the treatment can differ. It is worth getting this right as VAT errors can distort both your bookkeeping and tax return.

Claiming allowable expenses is not about being aggressive with tax. It is about keeping proper records, separating business from personal spending, and making sure your return reflects the real cost of earning your income. If a cost is unusual, mixed with private use or significant in value, ask before you file - a short conversation can prevent an expensive correction later.