Claiming Business Expenses

Claiming business expenses is an essential aspect of running a successful business. It allows you to deduct eligible costs from your income, effectively lowering your taxable profit and reducing your income tax liability. Understanding which expenses are allowable and how to claim them is crucial for optimising your tax strategy and ensuring you’re not paying more than you need to.

Every day, allowable expenses cover a range of costs that businesses can deduct. These include general business expenses such as office supplies and equipment, business travel mileage, subsistence, home office use, professional clothing necessary for work, and accommodation expenses during business trips.

However, business expenses and tax deductions can be complex, with specific rules and regulations governing what you can and cannot claim. Our guide will show you what you can claim and how to claim them.

We also offer a free Excel business expense template to reclaim any expenses you have paid personally. This template is available for immediate download and easily integrated into your business operations.

Instructions, including examples, are available for using the template. Two versions are available: one for businesses that need to account for VAT and another for those not registered for VAT. This ensures that whether your business is VAT-registered or not, you can maintain accurate and organised records of your expenses.

Claiming Business Expenses Software

Managing expenses is a key part of running a successful business—but it can quickly become overwhelming without the right systems in place. Modern expense and accounting software helps you stay organised, keep accurate records, and make sure you never miss a claimable cost. Below are some of the best tools available, along with what they offer.

Accounting Software

QuickBooks

QuickBooks remains one of the most popular accounting platforms for small businesses—and for good reason. It brings bookkeeping, mileage tracking, and receipt capture together in one easy-to-use system.

Key features:

• Automatic mileage tracking
  Uses GPS to record every work-related journey, ensuring your mileage claims are accurate and complete.
• Receipt capture via the mobile app
  Photograph a receipt, and QuickBooks stores it, extracts key details, and links it to the correct transaction. This eliminates manual entry and helps keep your records audit-ready.
• Track income and expenses in one place
  All transactions feed into your accounts, giving you a clear picture of business performance at any time.
• Invoice on the go
  Create and send invoices directly from your phone, making it easier to keep cash flow moving while staying organised.

QuickBooks combines speed, automation, and flexibility—ideal for business owners who want reliable expense tracking alongside full accounting features.

Xero

Another major player is Xero, known for its clean interface and strong cloud-based features. Xero includes a built-in expense claim tool for users on the Grow plan, with the option to add more users for £2.50 each.

Why Xero works well for expenses:

• Simple expense claims for employees
• Easy receipt uploads and mobile app support
• Clear audit trails for each reimbursement
• Integration with Xero’s full accounting suite

Xero is an excellent option for businesses that want scalable bookkeeping software with straightforward expense management baked in.

Expense management software

Expenses management software is explicitly designed to simplify how you track and claim business expenses. These tools focus on speed, automation, and reducing paperwork.

Pleo

PLEO has become a top choice for businesses looking to automate expense capture and reduce administrative time.

How Pleo helps:

• Smart company cards
  Employees can use Pleo cards to pay for approved expenses. Each transaction automatically prompts them to upload the matching receipt.
• Automatic receipt matching
  Receipts can be photographed or emailed to Pleo, and the system pairs them with the correct transaction.
• Real-time spending overview
  Managers can see who is spending, on what, and for which project—making budgeting and approvals easier.
• Smooth handover to accountants
  Expense data can be exported directly into accounting software, saving time at month-end.

PLEO cuts down the time spent collecting receipts and chasing staff, making it especially useful for growing teams.

Payhawk

Payhawk is an all-in-one spend management platform that helps businesses control expenses, issue company cards, and automate receipt capture. It brings cards, expenses, invoices, and approvals together in one place, making it easy to track spending across the business.

Key benefits:

• Corporate cards for teams
  Issue physical or virtual cards to employees, set spending limits, and decide how each card can be used. Every transaction appears instantly in the Payhawk dashboard.
• Automated receipt capture
  After a purchase, employees take a photo of the receipt. Payhawk automatically reads the details using OCR and matches them to the correct transaction, eliminating manual data entry.
• Real-time spend overview
  See all spending as it happens. You can track costs by department, project, location or cardholder, helping you stay on top of budgets and avoid surprises.
• Custom approvals and policies
  Set approval rules for different teams or cost centres. Payhawk automatically routes expenses to the right manager, reducing delays and helping maintain compliance.
• Multi-currency support
  Ideal for businesses spending internationally. Payhawk supports multiple currencies and simplifies cross-border spending and card use.

Payhawk is a strong choice for small and growing businesses that want greater control over company spending, need employee cards, or want to automate receipt collection and expense workflows.

What Allowable Business Expenses Can I Claim?

Understanding allowable expenses you can claim is essential for reducing your tax bill; however, the rules surrounding allowable expenses can be complex. The following sections will explore the world of allowable expenses, highlighting common categories, providing examples, and key factors to consider when claiming deductions.

We also have a guide to self-employed allowable expenses.

Accommodation

You can claim accommodation expenses if your job requires you to take overnight business trips. The costs must be justified and reflect a reasonable choice. This means avoiding luxury or top-tier hotels in favour of more modest accommodations that adequately meet your needs without excessive spending.

Accountancy and Bookkeeping

You can claim accountancy and bookkeeping fees as long as they are for the business only. This means that if you use your personal accountant or bookkeeper for both business and personal finances, you can only claim a portion of their fees that relate to the business.

Advertising and Marketing

You can claim online and offline advertising expenses, such as social media ads, Google AdWords, print advertising, billboards, and direct mail campaigns. You can also claim for marketing materials like brochures, flyers, and promotional gifts,

Business Equipment

If you’re self-employed or a company, you can deduct the cost of business equipment, including computers and printers. The equipment cost is on the balance sheet, and each year, depreciation is calculated as an expense.

Depreciation allows business owners to write off the cost of equipment over time. When claiming business equipment costs, you’ll need to calculate the depreciation of each item. Our depreciation schedule can help you calculate the figures.

Capital Allowances

Capital allowances are a tax benefit for businesses. They let you deduct some or all of the cost of certain assets (equipment, machinery, or vehicles) from your profits before paying tax. Think of it like a discount on your tax bill for investing in your business.

The way you claim capital allowances depends on your business structure. Here’s a basic overview:

• Sole traders & partnerships: Claim on your Self-assessment tax return. Include the details of the assets and the type of allowance you’re claiming.  
• Limited companies: Claim on your Company Tax Return. You’ll need to include a separate calculation of capital allowances.  

Business Mileage

If you use your own vehicle for business travel, you can claim an amount per mile, 45p for the first 10,000 miles and 25p per mile over 10,000 miles. You cannot claim any mileage between home and work. Using this rate, you cannot claim any other expenses concerning your vehicle, e.g. road tax, repairs, and insurance.

If your vehicle is mainly used for business use, you can claim all your fuel, insurance, repairs and road tax. You must make sure that you deduct any private use. It can be completed by calculating the percentage of private travel and calculating the figure.

An example of business mileage is that a small business owner spends £250 a month on their petrol and running costs. They travel 500 miles in total, but 50 of these are private miles. 10% is classed as private use £250 – £25 = £225 can be claimed.

To record mileage, use either an accounting software package like QuickBooks, the expense template below or our mileage log. An example of the small business mileage log is below.

If you have a company car or van, the rules are more complicated, and you will need to find out further information on www.gov.uk

Business Premises

As a business owner, you may be able to claim business premises expenses against your income. This can include rent, business rates, utilities and other running costs. To be eligible, you must use the premises for business purposes.

Clothing

You can claim expenses for specialist clothing necessary for your business operations, such as steel-capped shoes, safety wear, and specific uniforms designed for your job. This includes items essential for your workplace’s safety and requirements.

However, it’s important to note that you cannot claim for general clothing items you might wear to work. This means everyday wear does not qualify for claims under these guidelines, even if used for work.

General Business Expenses

Most general office expenses are eligible for reimbursement, covering a wide range of costs. This includes basic supplies like stationery, phone bills, ink, and printing costs for marketing materials or internal documents. Additionally, expenses related to advertising efforts, insurance premiums to protect the business, office rent, utilities to keep the office running smoothly, and the purchase of goods intended for resale are all eligible for reimbursement.

Insurance

Insurance includes premiums for essential business insurance such as public liability, professional indemnity, employer’s liability, and property insurance. You can also claim for insurance covering specific assets such as vehicles, equipment, or stock. However, it’s important to note that personal insurance policies, such as life insurance or private health insurance, are generally not allowable expenses.

Payroll

Payroll costs, such as salaries, wages, bonuses, and employer National Insurance contributions, are generally allowable business expenses. Pension contributions made by the employer on behalf of their employees are also considered allowable expenses.

Pension

As a sole trader, it’s important to understand that you’re not eligible to claim contributions to a personal pension scheme as a business expense. A Limited company has the advantage of establishing a business pension scheme. This allows the company not only to contribute towards the pensions of its staff but also to potentially enjoy tax benefits from these contributions. Setting up a business pension scheme can be a valuable perk for employees, demonstrating the company’s commitment to their long-term well-being and financial security.

Professional Fees

You can claim certain professional expenses as business deductions against your income as a self-employed professional or a limited company. These expenses must be incurred “wholly and exclusively” in the course of your business, and they must be for the purpose of generating income.

Common examples of deductible professional expenses include solicitors, accountants, bookkeepers, and any other professional fees you may incur while doing business. Note that you cannot deduct personal expenses, even if they relate to your business.

Subcontractors

You can claim the cost of subcontractors as a business expense, including their fees and any related payments made for completing work on your behalf.

Subscriptions

Subscriptions to professional bodies, trade journals, and other relevant publications are generally considered allowable business expenses. Subscriptions can help you stay informed about industry developments, best practices, and regulatory changes, ultimately benefiting your business.

Training

You can claim the cost of training that helps you maintain or improve the skills you already use in your business. This includes refresher courses, updates on industry changes, and training needed to keep your services current. Always keep proof of the course content and fees to support your claim.

Travel and Subsistence

As well as business mileage, you can also claim for train, bus, tolls and parking if they are business-related. You can’t claim for your normal commute to work.

Subsistence is the tax definition of food and drink. You can claim subsistence if you are away from your normal place of work. The rates are as follows, and the maximum amount:

• £5 if working away for at least 5 hours
• £10 if working away for at least 10 hours
• £25 if working away for at least 15 hours and late after 8 pm

To claim, you must have incurred a cost.

Claiming Business Expenses for Working from Home

If you’re working from home, you can claim your expenses in one of two ways: a fixed rate, known as simplified expenses, which simplifies the calculation process, or you can choose to claim a percentage of your actual costs.

The fixed rate is calculated on the number of hours worked at home per month.

25 to 50 hours = £10 per month

51 to 100 hours = £18 per month

101 or more hours = £26 per month

An example of a fixed expense is working 70 hours at home per month; you can therefore claim 12 x £18 = £216 per year.

To claim a portion of your expenses, you must account for costs such as heating, electricity, council tax, mortgage interest, rent, and internet. Next, figure out the fraction that relates to your business activities.

Example: 1 room of a 5-room house is used for business 3 days per week. The total house expense is £200 per month. £200 divided by 5 rooms is £40. It is only used for 3 days per week; therefore, claiming 3/7 of £40, which equals £17.14 for 3 days.

Business Expense Template

To help claim business expenses, we have developed two Excel templates to record your Expenses. There are VAT and non-VAT options; both allow you to enter the mileage and all other payments made. The figures can then be posted to the accounts, and you can claim back the value of the expenses.

Further Advice for Claiming Business Expenses

Claiming business expenses can be complicated; the above is only a guideline, and full details can be found at www.gov.uk

If you are unsure of what allowable business expenses you can claim, check with your accountant.

Return from claiming business expenses to Excel bookkeeping templates.