Allowable expenses (sometimes referred to as revenue or trading expenses) are anything which has been purchased “wholly and exclusively” for the use/purpose of your business.
This means that any expenses must have been used for either the purpose of day to day running (e.g. stationery) or expanding (e.g. advertising) your business.
Where any item is not wholly used by a business but is an allowable expense, you will need to proportion use.
For example, if you have a mobile phone and use for both business and personal use, you can review an itemised phone bill to work out the percentage of business use – and then claim the relevant amount against the full bill as an expense
For reference, HMRC Guidance (BIM37007) states:
The legislation disallows any expenditure not incurred wholly and exclusively for the purposes of the trade, profession or vocation.
This means that the rule is only satisfied if the taxpayer’s sole purpose for incurring the expense is for the purposes of their trade, profession or vocation.
If you identify a non-trade purpose then the expenditure is not allowable.
Important: Claims for business expenses which have not been incurred as part of your business are classed as tax fraud and is against the law. If you’re in any doubt, check before claiming.
List of Allowable expenses
It would be nearly impossible to provide a full list of allowable expenses – anything which your business purchases, with the sole benefit for the business, generally can be accepted as an allowable expense.
Our tax guide will help you to find the relevant expenses through our dedicated section which provides guidance on how to log expenses, and what can be claimed in these categories.
Alternatively, use the search function in our tax guide – e.g. ‘stationery’, ‘hotel’ or ‘rent’.
Quick Tips
Search within your email for XpressCampaigns or eShop for any purchases you may have made – this could include promotional items and books used or sold within your business.
Have a check at common online stores for any items you’ve purchased for use – for example, check Amazon and eBay order websites to show your full history of items bought – and pull out anything which is a business expense item
Bank Statements – have a check if there’s anything you’ve paid out for which you may have missed!