Business plan: dos and don’ts
In this guide:
- Write a business plan: step-by-step
- The audience for your business plan
- What a business plan should include
- Business plan executive summary - the dos and don’ts
- Your business, its products and services
- Your business markets and competitors
- Business plan: marketing and sales
- Business plan: your team's skills
- Business plan: your operations
- Financial forecasts for your business plan
- Tips for presenting your business plan
- Writing a business plan: 5 top tips
- Business plan: dos and don’ts
- Download a business plan template
The audience for your business plan
Your business plan will need to be ready for an external audience to view if you're seeking finance or investment.
There are many benefits to creating and managing a realistic business plan. Even if you just use it in-house, it can:
- help you spot potential pitfalls before they happen
- structure the financial side of your business efficiently
- focus your efforts on developing your business
- work as a measure of your success
A business plan is a document that can be used to secure external funding. Potential investors, including banks, may invest in your idea, work with you or lend you money due to the strength of your plan.
It helps demonstrate how your business operates, generates value and manages financial risk, which can influence funding decisions.
The following people or institutions may request to see your business plan at some stage:
- banks
- external investors - whether this is a friend, a venture capitalist firm or a business angel
- grant providers
- anyone interested in buying your business
- potential partners
You should also remember that a business plan is a living document that will help you monitor your performance and stay on track and will, therefore, need updating and changing as your business grows.
Regular updates can also help demonstrate business stability, future planning and operational readiness, which are important signals for both internal and external audiences.
Whether you intend to use your plan internally or as a document for external people, it should still take an objective and honest look at your business. Failing to do this could mean that you and others have unrealistic expectations of what can be achieved and when.
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What a business plan should include
How to make a clear and simple plan for how your business will move through the startup and growth phases.
Your business plan should provide details of how you will develop your business, when you will do it, who will play a part and how you will manage the finances.
Clear explanation of these elements helps demonstrate how your business is organised, delivers value and plans for future growth.
Clarity on these issues is particularly important if you're looking for finance or investment. The process of building your plan will also focus your mind on how your new business will need to operate to give it the best chance of success.
Your plan should include:
- An executive summary - this is an overview of the business you want to start. It's vital. Many lenders and investors make judgments about your business based on this section of the plan alone - read business plan executive summary.
- Your vision and business idea - a short description of who you are, what you plan to sell or offer, why and to whom, your business goals and key selling points - see your business, its products and services.
- Your marketing and sales strategy - provides details on customers, competitors, market trends and tactics (eg pricing, distribution and promotion) - see your business markets and competitors and marketing and sales.
- Your management team and personnel - your credentials and the people you plan to recruit to work with you - see business plan: your team's skills.
- Your operations - your premises, production facilities, your management information systems and IT - see business plan: your operations.
- Financial forecasts - this section provides details of cash flow forecasts, profit and loss accounts and balance sheets - see financial forecasts for your business plan.
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Business plan executive summary - the dos and don’ts
Follow these executive summary dos and don'ts to create an engaging and persuasive executive summary.
The executive summary outlines the key points of your business plan and is usually the first section that people will read.
The executive summary sets the tone for the rest of your business plan. Here, you should succinctly capture the main points of your document. It is also your opportunity to stand out.
Follow our dos and don'ts to help you create an engaging and persuasive executive summary.
Executive summary dos
- Explain what your business is selling in the opening paragraph - outline the most interesting thing about your company and what you are doing that nobody else is. You want to engage your reader from the very beginning with your unique selling point.
- Provide a synopsis of the key points of your entire plan - make sure you include highlights from each section of the document.
- Be clear and concise - no longer than two pages at most. It's advisable to write this section of your plan after you have completed the rest.
- Use engaging language and tone - your executive plan needs to draw the reader into the rest of your business plan and, ultimately, your business idea.
- Tailor the executive summary to the reader - if you want to engage with investors, highlight how much investment is required and focus on how your business is a great investment opportunity.
- Write the executive summary in the order of the business plan - this provides a straightforward outline of the information that is included in the business plan and creates a flow to the document.
Executive summary don'ts
- Don't include jargon or technical language - don't assume that the reader will understand the technical aspects of your business or sector.
- Don't include an extended table of contents - this won't engage the reader and is a replication of the contents page.
- Don't include information that is unrealistic and can't be substantiated in the rest of the plan - an experienced investor or business person will recognise hype and this will undermine the plan's credibility.
- Don't forget to proof read - ensure that you double check your executive summary for errors. Have it reviewed by someone who was not involved in its creation.
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Your business, its products and services
Outlining what your company does, what you can offer, the market needs you address and why your idea is viable.
You must be able to clearly describe what your business does, whether you are writing the business plan for your own purposes or if you want other people to provide funds through investments or loans.
This part of the plan sets out your vision for your new business and includes who you are, what you do, what you have to offer and the market you want to address.
Start with an overview of your business:
- when you started or intend to start trading and the progress and investment you have made to date
- the type of business and the sector it is in
- any relevant history - for example, if you acquired the business, who owned it originally and what they achieved with it
- the current legal structure
- your vision for the future
Then describe your products or services as simply as possible, defining:
- what makes it different
- what benefits it offers
- why customers would buy it from you instead of your competitors
- how you plan to develop your products or services
- whether you hold any patents, trade marks or design registration
- the key features and success factors of your industry or sector
Remember that the person reading the plan may not understand your business and its products, services or processes as well as you do, so try to avoid jargon. It's a good idea to get someone who isn't involved in the business - a friend or family member - to read this section of your plan and make sure they can understand it.
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Your business markets and competitors
Define your market, identify your target customers and main competitors and look to the future to anticipate change.
In this section, you should define your market, your position in it and outline who your competitors are. In order to do this you should refer to any market research you have carried out. You need to demonstrate that you're fully aware of the marketplace you're planning to operate in and that you understand any important trends and drivers.
Clear market analysis shows how your business fits into the wider sector and how demand, competition and customer behaviour influence your plans.
You should also be able to show that your business will be able to attract customers in a growing market despite the competition.
Business planning for your market position
Key areas to cover include:
- your market - its size, historical data about its development and key current issues
- your target customer base - who they are and how you know they will be interested in your products or services
- your competitors - who they are, how they work and the share of the market they hold
- the future - anticipated changes in the market and how you expect your business and your competitors to react to them
For further information, see market research and market reports and understand your competitors.
It is important to know your competitors' strengths and weaknesses as compared to your own - and it is good practice to do a competitor analysis of each one. Remember that the market is not static - your customers' needs and your competitors can change.
So, as well as showing the competitor analyses you have undertaken, you should also demonstrate that you have considered and drawn up contingency plans to cover alternative scenarios.
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Business plan: marketing and sales
Sectors covering price, customers, your sales channels, distribution methods, promotional strategy and sales plan.
This section should describe the specific activities you plan to use to promote and sell your products and services. It's often the weak link in business plans so it's worth spending time on it to make sure it's both realistic and achievable.
It also helps demonstrate how your business will attract customers, generate demand and convert interest into sales.
A strong sales and marketing section means you have a clear idea of how you will get your products and services to market.
Your plan will need to provide answers to these questions:
- How do you plan to position your product or service in the marketplace? For further information - see how to create your marketing strategy.
- Who are your customers? Include details of customers who have shown an interest in your product or service and explain how you plan to attract new customers - see know your customers' needs.
- What is your pricing policy? How much will you charge for different customer segments, quantities, etc? See how to price your product or service.
- How will you promote your product or service? Identify your sales process methods, eg direct marketing, advertising, PR, email, e-sales, social marketing - see sales and marketing for start-ups.
- How will you reach your customers? What channels will you use? Which partners will be needed in your distribution channels? See how to reach your customers effectively.
- How will you do your selling? Do you have a sales plan? Have you considered which sales method will be the most effective and most appropriate for your market, such as selling by phone, over the internet, face-to-face or through retail outlets? Are your proposed sales methods consistent with your marketing plan? Do you have the right skills to secure the sales you need? See more on the sales process.
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Business plan: your team's skills
An analysis of your workforce - the structure, key skills of your team, training and recruitment plans.
Your business plan needs to set out your own background and skills and the structure and key skills of both your management team and your staff. It should identify the strengths in your team and your plans to deal with any obvious weaknesses.
Management team skills
If you're looking for external funding, your management team can be a decisive factor. Explain who is involved, their roles, and how they fit into the organisation. Include a CV or a paragraph for each individual, outlining their background, relevant experience, and qualifications. Include any advisers you might have, such as accountants or lawyers.
If you're looking to satisfy your bank manager or other investors, you need to demonstrate that your management team has the right balance of skills, drive and experience to enable your business to succeed. Key skills include sales, marketing and financial management as well as production, operational and market experience.
Your investors will also want to be convinced that you and your team are fully committed. Therefore it's a good idea to set out how much time and money each person will contribute (or has already contributed) to the business and the salaries and benefits you plan to draw - see how to use your business plan to get funding.
Your people's skills
Give details of your workforce in terms of total numbers and by department. Spell out what work you plan to do internally and if you plan to outsource any work. Other useful figures might be sales or profit per employee, average salaries, employee retention rates and productivity.
Your plan should also outline any recruitment or training plans, including timescales and costs.
It's vital to be realistic about the commitment and motivation of your people and spell out any plans to improve or maintain staff morale.
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Business plan: your operations
Information to include about how you will source, procure, create and deliver the goods or services you will be selling.
Your business plan also needs to outline your operational capabilities and any planned improvements. There are certain areas you should focus on.
Business location
- Do you have any business property?
- What are your long-term commitments to the property?
- Do you own or rent it?
- What are the advantages and disadvantages of your current location?
Producing your goods and services
- Do you need your own production facilities, or would it be cheaper to outsource any manufacturing processes?
- If you do have your own facilities, how modern are they?
- What is the capacity compared with existing and forecasted demand?
- Will any investment be needed?
- Who will be your suppliers?
Management information systems
- Have you established procedures for stock control, management accounts and quality control?
- Can they cope with any proposed expansion?
For more information see stock control and inventory and financial and management accounts.
Information technology
- IT is a key factor in most businesses, so include your strengths and weaknesses in this area.
- Outline the reliability and the planned development of your systems.
For more information see an introduction to IT.
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Financial forecasts for your business plan
What to include in your business sales, cashflow and profit and loss forecasts, including financial forecast examples.
As part of your plan, you will need to provide a set of financial projections which translate what you have said about your business into numbers.
You will need to look carefully at:
- how much capital you need if you are seeking external funding
- the security you can offer lenders
- how you plan to repay any borrowings
- sources of revenue and income
You may also want to include your personal finances as part of the plan at this stage.
For further information on how to fund your business, see business financing options - an overview.
Financial planning
Your forecasts should run for the next three to five years and their level of sophistication should reflect the sophistication of your business. However, the first 12 months' forecasts should have the most detail associated with them.
Include the assumptions behind your projection with your figures, both in terms of costs and revenues so investors can clearly see the thinking behind the numbers.
For further information, see calculate how much money you need to start your business and managing business finance during the start-up phase.
What your forecasts should include
- Sales forecast - the amount of money you expect to raise from sales - see forecast and plan your sales.
- Cashflow statements - your cash balance and monthly cashflow patterns for at least the first 12 to 18 months - see cashflow management.
- Profit and loss forecast - a statement of the trading position of the business: the level of profit you expect to make, given your projected sales and the costs of providing goods and services and your overheads.
For financial forecast examples, download a spreadsheet containing cashflow forecast, profit and loss forecast and sales forecast templates.
Risk analysis
Alongside your financial forecasts, it is good practice to show that you have reviewed the risks your business could face and that you have looked at contingencies and insurance to cover these. Risks can include:
- competitor action
- commercial issues - sales, prices, deliveries
- operations - IT, technology or production failure
- staff - skills, availability and costs
- fire or flood
See risk management.
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Tips for presenting your business plan
Tips for business plan presentation, such as appendices, proofreading and further advice and support.
To make sure your business plan has maximum impact, there are a number of points to observe.
Keep the plan short - it's more likely to be read if it's a manageable length. Think about the presentation and keep it professional - even if you only intend to use the plan in-house. Remember, a well-presented plan will reinforce the positive impression you want to create of your business.
Tips for presenting your business plan
Here are nine tips for making the best presentation of your business plan:
- Include a cover or binding and a contents page with page and section numbering.
- Start with the executive summary.
- Ensure it's legible - make sure the type is ten point or above.
- You may want to email it, so ensure you use email-friendly formatting.
- Even if it's for internal use only, write the plan as if it's intended for an external audience.
- Edit the plan carefully - get at least two people to read it and check that it makes sense.
- Show the plan to expert advisers - such as your accountant - and ask for feedback. Redraft sections they say are difficult to understand.
- Avoid jargon and put detailed information - such as market research data or balance sheets - in an appendix at the back.
- You may have detailed plans for specific areas of your business, such as a sales plan or a staff training plan, but it is best not to include these, though it is good practice to mention that they exist.
While it is sensible to seek advice from external advisers, it is not a good idea to get them to write the plan for you. Investors and lenders need to have confidence that you personally understand your business plan and are committed to the vision for the business.
Make sure your plan is realistic. Once you have prepared your plan, use it. If you update it regularly, it will help you keep track of your business' development - see business budgeting and prepare a business plan for growth.
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Writing a business plan: 5 top tips
Five key steps that can help you to prepare a successful business plan when you're starting a business.
It is essential to have a business plan when you're starting a business. Your business plan has many functions. It will help you to:
- clarify your business idea
- spot potential problems
- set your goals
- measure your progress
- plan growth
You'll need a business plan if you want to secure investment or a loan from a bank.
Five tips when writing a business plan
The following five tips will help you to prepare a successful business plan:
1. Outline your business goals
Provide details of how you are going to develop your business, when you are going to do it, who will be involved, and how you will manage the finances. Clarity on these issues is essential for securing finance or investment.
2. Research your markets and competitors
Demonstrate that you're fully aware of the marketplace that you're planning to operate in. Highlight significant trends and drivers. You should prove that your business will be able to attract customers despite potential competition.
3. Provide realistic financial forecasts
Show financial projections that support what you have said about your business. Your forecasts should run for three years. The first 12 months' forecasts should have the most detail.
4. Plan your executive summary
The executive summary outlines the key points of your entire business plan. It is usually the first section that people will read. Include highlights from each section of the document. It is a good idea to write the executive summary last - make it engaging and avoid jargon.
5. Present in a professional format
A well-presented plan will reinforce the positive impression you want to create for your business. Use a business plan template to keep you focused and simplify the process of creating your business plan.
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Business plan: dos and don’ts
A list of things you must do when creating your business plan and things you don't want to do in order to avoid mistakes.
A business plan focuses on your business strategy and what you need to do to achieve your goals. It can help to gain investment. A business plan can also monitor progress and success within your business.
When creating your business plan, consider the following list of dos and don'ts.
Business plan dos
- Know your audience: Always consider the purpose of the plan. For example, do you want to target a supplier or are you hoping to get funding from a bank or an investor? If funding is your priority, the audience will be interested in what they will get for their investment. You must adapt the plan to the reader. Ensure that the key messages resonate with them.
- Be engaging: Outline your business idea in a persuasive and positive tone. You want your proposal to stand out. Ensure you highlight your key/niche selling points.
- Be clear and concise: Make the business plan easy to read. Structure the document into meaningful sections and use headings.
- Show thorough knowledge of your market: Demonstrate clear knowledge of your target market, your customers and competition. Show a clear understanding of the potential size of the market. Conduct research and include credible data sources to illustrate that your idea has the potential to maintain long-term growth.
- Provide detail and answer important questions: Address how you are going to develop your business, when you are going to do it, who is going to play a part and how you will manage the finances.
- Know your numbers: Demonstrate a consideration and understanding of costs, price points, market size and profit margins. Attempt to provide accurate numbers in your financial forecasts. An investor will be interested in whether the business is scalable and whether there is an opportunity to grow. Alongside your financial forecasts, it is good practice to show that you have reviewed the risks your business could face.
- Present in a professional format: Use images, graphics and tables to illustrate key information where appropriate.
Business plan don'ts
- Don't be vague - avoid including unrealistic information you cannot substantiate.
- Don't include technical jargon - don't assume that the reader will understand the technical aspects of your business or sector.
- Don't exclude the essentials - don't leave out important details, facts and figures.
- Don't make things complicated - avoid making your business plan overly complex.
- Don't dispense with your business plan - don't forget to regularly review and update your business plan. It's a working document that will help you to focus on your vision and objectives.
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Download a business plan template
Free downloadable business plan template with tips and guidance to help you write a successful business plan.
Our business plan template is an interactive form designed to simplify the process of creating your business plan.
Business plan preparation
The business plan template asks a number of detailed questions about your proposed business, so it's worthwhile to carry out research before you complete it. Consider:
- your business goals
- legal requirements for your business
- your business market and competitors
- financial forecasts
- sales plans
- potential suppliers
- staff and premises
Download our business plan template (DOC, 874K)
For further support to create your business plan see what to include in your business plan.
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How to claim business expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
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Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
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Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
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Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
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Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
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Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
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Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
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Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
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How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
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Links
Marketing, entertainment and subscriptions expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
Content category
Source URL
/content/how-classify-business-expenses
Links
Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
Content category
Source URL
/content/office-property-and-equipment-expenses
Links
Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
Content category
Source URL
/content/car-van-and-travel-expenses
Links
Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
Content category
Source URL
/content/clothing-expenses
Links
Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
Content category
Source URL
/content/staff-expenses
Links
Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
Also on this siteContent category
Source URL
/content/reselling-goods-expenses
Links
Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
Content category
Source URL
/content/marketing-entertainment-and-subscriptions-expenses
Links
Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
Content category
Source URL
/content/legal-and-financial-costs-expenses
Links
How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
Content category
Source URL
/content/how-claim-business-expenses
Links
Legal and financial costs expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
Content category
Source URL
/content/how-classify-business-expenses
Links
Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
Content category
Source URL
/content/office-property-and-equipment-expenses
Links
Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
Content category
Source URL
/content/car-van-and-travel-expenses
Links
Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
Content category
Source URL
/content/clothing-expenses
Links
Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
Content category
Source URL
/content/staff-expenses
Links
Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
Also on this siteContent category
Source URL
/content/reselling-goods-expenses
Links
Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
Content category
Source URL
/content/marketing-entertainment-and-subscriptions-expenses
Links
Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
Content category
Source URL
/content/legal-and-financial-costs-expenses
Links
How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
Content category
Source URL
/content/how-claim-business-expenses
Links
Reselling goods expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
Content category
Source URL
/content/how-classify-business-expenses
Links
Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
Content category
Source URL
/content/office-property-and-equipment-expenses
Links
Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
Content category
Source URL
/content/car-van-and-travel-expenses
Links
Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
Content category
Source URL
/content/clothing-expenses
Links
Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
Content category
Source URL
/content/staff-expenses
Links
Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
Also on this siteContent category
Source URL
/content/reselling-goods-expenses
Links
Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
Content category
Source URL
/content/marketing-entertainment-and-subscriptions-expenses
Links
Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
Content category
Source URL
/content/legal-and-financial-costs-expenses
Links
How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
Content category
Source URL
/content/how-claim-business-expenses
Links
Staff expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
Content category
Source URL
/content/how-classify-business-expenses
Links
Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
Content category
Source URL
/content/office-property-and-equipment-expenses
Links
Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
Content category
Source URL
/content/car-van-and-travel-expenses
Links
Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
Content category
Source URL
/content/clothing-expenses
Links
Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
Content category
Source URL
/content/staff-expenses
Links
Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
Also on this siteContent category
Source URL
/content/reselling-goods-expenses
Links
Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
Content category
Source URL
/content/marketing-entertainment-and-subscriptions-expenses
Links
Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
Content category
Source URL
/content/legal-and-financial-costs-expenses
Links
How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
Content category
Source URL
/content/how-claim-business-expenses
Links
Clothing expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
Content category
Source URL
/content/how-classify-business-expenses
Links
Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
Content category
Source URL
/content/office-property-and-equipment-expenses
Links
Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
Content category
Source URL
/content/car-van-and-travel-expenses
Links
Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
Content category
Source URL
/content/clothing-expenses
Links
Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
Content category
Source URL
/content/staff-expenses
Links
Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
Also on this siteContent category
Source URL
/content/reselling-goods-expenses
Links
Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
Content category
Source URL
/content/marketing-entertainment-and-subscriptions-expenses
Links
Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
Content category
Source URL
/content/legal-and-financial-costs-expenses
Links
How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
Content category
Source URL
/content/how-claim-business-expenses
Links
Car, van and travel expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
Content category
Source URL
/content/how-classify-business-expenses
Links
Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
Content category
Source URL
/content/office-property-and-equipment-expenses
Links
Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
Content category
Source URL
/content/car-van-and-travel-expenses
Links
Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
Content category
Source URL
/content/clothing-expenses
Links
Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
Content category
Source URL
/content/staff-expenses
Links
Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
Also on this siteContent category
Source URL
/content/reselling-goods-expenses
Links
Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
Content category
Source URL
/content/marketing-entertainment-and-subscriptions-expenses
Links
Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
Content category
Source URL
/content/legal-and-financial-costs-expenses
Links
How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
Content category
Source URL
/content/how-claim-business-expenses
Links
Office, property and equipment expenses
In this guide:
- Expenses if you're self-employed
- How to classify business expenses
- Office, property and equipment expenses
- Car, van and travel expenses
- Clothing expenses
- Staff expenses
- Reselling goods expenses
- Marketing, entertainment and subscriptions expenses
- Legal and financial costs expenses
- How to claim business expenses
How to classify business expenses
How to categorise and claim expenses costs as allowable expenses or capital allowances to get the most tax benefits.
Understanding the categories of allowable expenses and capital allowances is important for effective financial management.
Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits.
If you work from home specific rules apply.
Costs you can claim as allowable expenses
These include:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.
Costs you can claim as capital allowances
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
- equipment
- machinery
- business vehicles, eg cars, vans, lorries
If you use cash basis
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons
You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.
If you work from home
You may be able to claim a proportion of your costs for things like:
- heating
- electricity
- rates
- mortgage interest or rent
- internet and telephone use
You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.
Simplified expenses
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
- vehicles
- working from home
- living on your business premises
Content category
Source URL
/content/how-classify-business-expenses
Links
Office, property and equipment expenses
How to claim business expenses for your office, property and equipment and an overview of eligible items.
Claim items you'd normally use for less than two years as allowable expenses, for example:
- stationery
- rent, rates, power and insurance costs
For equipment you keep to use in your business, for example computers or printers, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
See guidance on cash basis acounting and capital allowances.
You can't claim for any non-business use of premises, phones or other office resources.
Stationery
You can claim expenses for:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than two years
- computer software if your business makes regular payments to renew the license (even if you use it for more than two years)
Claim other software for your business as capital allowances, unless you use cash basis.
Rents, rates, power and insurance costs
You can claim expenses for:
- rent for business premises
- business and water rates
- utility bills
- property insurance
- security
- using your home as an office (only the part that's used for business)
Business premises
You can't claim expenses or allowances for buying building premises.
Claim expenses for repairs and maintenance of business premises and equipment.
For alterations to install or replace equipment, claim:
- allowable expenses if you use cash basis accounting
- capital allowances if you use traditional accounting
You can also claim capital allowances for some integral parts of a building, for example water heating systems.
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Car, van and travel expenses
What you can claim as business expenses for your company car, van and travel expenses and what you can’t claim for.
You can claim allowable business expenses for:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- hire charges
- vehicle licence fees
- breakdown cover
- train, bus, air and taxi fares
- hotel rooms
- meals on overnight business trips
You can't claim for:
- non-business driving or travel costs
- fines
- travel between home and work
You may be able to calculate your car, van or motorcycle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle.
Buying vehicles
If you use traditional accounting and buy a vehicle for your business, you can claim this as a capital allowance.
If you use cash basis accounting and buy a car for your business, claim this as a capital allowance as long as you're not using simplified expenses.
For all other types of vehicles, claim them as allowable expenses.
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Clothing expenses
What clothing items are classed as allowable business expenses that you can claim as expenses for your business.
You can claim allowable business expenses for:
- uniforms
- protective clothing needed for your work
- costumes for actors or entertainers
You can't claim for everyday clothing (even if you wear it for work).
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Staff expenses
The types of allowable business expenses which you can claim for staff, and what you can't claim for.
You can claim allowable business expenses for:
- employee and staff salaries
- bonuses
- pensions
- benefits
- agency fees
- subcontractors
- employer's National Insurance
You can't claim for carers or domestic help, eg nannies.
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Reselling goods expenses
Details of some allowable business expenses self-employed persons can claim for when reselling goods.
You can claim allowable business expenses for:
- goods for resale (stock)
- raw materials
- direct costs from producing goods
You can't claim for:
- any goods or materials bought for private use
- depreciation of equipment
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Marketing, entertainment and subscriptions expenses
What types of marketing, entertainment and subscriptions your business can claim as business expenses.
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can't claim for:
- entertaining clients, suppliers and customers
- event hospitality
Subscriptions
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can't claim for:
- payments to political parties
- gym membership fees
- donations to charity - but you may be able to claim for sponsorship payments
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Legal and financial costs expenses
What you can claim for accountancy, legal and other professional fees and information on how to write off bad debts.
Accountancy, legal and other professional fees can count as allowable business expenses.
You can claim costs for:
- hiring of accountants, solicitors, surveyors and architects for business reasons
- professional indemnity insurance premiums
You can't claim for:
- legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
- fines for breaking the law
Bank, credit card and other financial charges
You can claim business costs for:
- bank, overdraft and credit card charges
- interest on bank and business loans
- hire purchase interest
- leasing payments
- alternative finance payments, eg Islamic finance
If you're using cash basis accounting you can only claim up to £500 in interest and bank charges.
You can't claim for repayments of loans, overdrafts or finance arrangements.
Insurance policies
You can claim for any insurance policy for your business, eg public liability insurance.
When your customer doesn't pay you
If you're using traditional accounting, you can claim for amounts of money you include in your turnover but won't ever receive ('bad debts'). However, you can only write off these debts if you're sure they won't be recovered from your customer in the future.
You can't claim for:
- debts not included in turnover
- debts related to the disposal of fixed assets, eg land, buildings, machinery
- bad debts that aren't properly calculated, eg you can't just estimate that your debts are equal to five per cent of your turnover
Bad debts can't be claimed if you use cash basis accounting because you've not received the money from your debtors. With cash basis, you only record income on your return that you've actually received.
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How to claim business expenses
How to keep on top of your business records in order to claim your business allowable expenses with HMRC.
Keep records of all your business expenses as proof of your costs. GOV.UK provides information on business records if you're self-employed.
Add up all your allowable expenses for the tax year and put the total amount on your Self Assessment tax return. GOV.UK provides further guidance on Self Assessment tax return.
You don't need to send in proof of expenses when you submit your tax return. But you should keep proof and records so you can show them to HM Revenue and Customs (HMRC) if asked.
You must make sure your records are accurate.
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