Why Tax Deductions Are Important
Many small business owners in the UK pay more tax than necessary simply because they’re unaware of what they can claim. By understanding allowable business expenses and keeping accurate records, you can reduce your tax bill legally and effectively. In this guide, we’ll highlight common and often-missed deductions that could help you save.
What Are Allowable Business Expenses?
Allowable expenses are costs that are ‘wholly and exclusively’ incurred for the purpose of running your business. These can be deducted from your turnover to calculate your taxable profit. HMRC provides detailed guidance here
Commonly Missed Tax Deductions
1. Home Office Expenses
If you work from home, you may be able to claim a portion of your household bills. This includes:
- Heating and electricity
- Internet and phone line
- Rent or mortgage interest (if using simplified expenses or calculating a fair percentage)
2. Mobile Phone Usage
If you use your personal mobile phone for business purposes, you may be able to claim a proportion of the cost based on usage. Keeping an itemised bill or usage log can help justify the claim.
3. Travel and Mileage
Business-related travel, whether by car, train, or even bicycle, can be claimed. If using a personal car, you can use HMRC’s approved mileage rates (e.g. 45p per mile for the first 10,000 miles).
Note: Commuting from home to a permanent workplace doesn’t count.
4. Professional Subscriptions
Membership fees for approved professional bodies (such as ICAEW, ACCA, or industry-specific organisations) are tax deductible. Check HMRC’s approved list before claiming.
5. Training and Development
Courses and materials directly related to your current business activities can be deductible. For example, a photography business could claim editing software courses, but not a course on general entrepreneurship.
6. Marketing and Advertising
Costs associated with promoting your business, including Facebook ads, printed flyers, Google Ads, website hosting, and graphic design — are all generally allowable.
7. Bank Charges and Payment Processing Fees
Charges on business bank accounts and transaction fees from Stripe, PayPal, or card machines can usually be claimed in full.
8. Bad Debts
If a customer genuinely won’t pay and all efforts to recover the money have failed, you may be able to write it off as a business loss (only applies to accrual accounting).
Capital Allowances
Larger equipment purchases, such as computers, vehicles, or machinery, may not be claimed as an expense in one go, but may be eligible for capital allowances. The Annual Investment Allowance (AIA) allows businesses to deduct the full cost of qualifying items up to a certain limit.
Pre-Trading Expenses
You can claim allowable expenses incurred in the 7 years before your business officially started, provided they were wholly for the business and you kept receipts.
Simplified Expenses vs Actual Costs
HMRC offers flat-rate options (simplified expenses) for things like business mileage, home use, and living on your business premises. These are easier to calculate but may not always yield the largest deduction.
Stay Organised to Maximise Claims
- Use accounting software to tag expenses correctly
- Scan and store receipts
- Keep separate business bank accounts
- Review transactions monthly with your accountant
Why Work with A Wigglesworth & Company?
Based in Doncaster and working with clients across the UK and overseas, A Wigglesworth & Company helps small businesses uncover every legitimate deduction. We make sure nothing gets missed, and you never pay more tax than necessary.
Speak to Us About Your Tax Position
Wondering if you’ve missed something? Let us take a closer look. Contact A Wigglesworth & Company for expert advice and support tailored to your business.