7 Key Examples of Business Expenses for Small UK Firms

Working out which business expenses you can safely claim often feels confusing for UK small business owners. One wrong move could mean missing out on tax relief or attracting unwanted attention from HMRC. Mistakes usually happen because the rules around travel, office supplies, rent, and professional fees are not always clear when you are handling everything yourself.

This guide cuts through the uncertainty by highlighting the most useful expenses you are genuinely allowed to claim. With practical tips based on official HMRC guidance, you will know exactly which costs help lower your tax bill and how to avoid errors that could trigger a tax enquiry. Get ready to discover actionable methods that will make a real difference to your business finances.

Table of Contents

• Understanding Travel and Mileage Costs
• Claiming Office Supplies and Stationery
• Deducting Utility and Rent Payments
• Including Staff Salaries and Wages
• Recognising Marketing and Advertising Fees
• Accounting for Legal and Professional Services
• Recording Training and Development Courses

Quick Summary

1. Understanding Travel and Mileage Costs

Travel and mileage costs represent one of the most straightforward business expenses to claim, yet many UK small business owners miss out on valuable tax relief simply because they do not understand how the system works. If your business requires you or your employees to travel using personal vehicles, these costs can add up significantly throughout the year. The good news is that HMRC provides clear guidance on what qualifies and how much you can claim back, making this one of the easier expenses to manage correctly.

When your business requires travel, you can claim back the actual cost of using a vehicle for business purposes. This covers far more than just fuel, which surprises many business owners. Your claim includes fuel, servicing, repairs, maintenance, depreciation of the vehicle itself, insurance premiums, and road tax. Rather than trying to calculate these individual costs, HMRC offers a simplified mileage allowance system that covers everything in one straightforward rate. For cars and vans, you can claim 45p per mile for the first 10,000 miles and 25p per mile for any mileage beyond that in a tax year. Motorcycles and bicycles have their own lower rates. The critical point here is that reimbursements at HMRC approved rates are completely tax-free, meaning you pay no tax or National Insurance on these payments.

The difference between what qualifies and what does not matters. Business travel includes journeys between different workplaces, client visits, supplier calls, and attending business meetings. Your normal commute from home to your main workplace does not count, no matter how far you travel. To claim these costs legitimately, you must keep accurate mileage logs showing the date, destination, business purpose, and miles travelled. Without these records, HMRC will not accept your claim if you face an inspection. Start maintaining a logbook now, either on paper or using a simple spreadsheet. Record the details when you travel, not weeks later from memory, as this makes your records much more credible and reliable.

Pro tip: Keep a dedicated notebook in your vehicle or use a free mileage tracking app, and record your business journeys immediately after each trip to avoid missing claimable miles and ensure your records withstand HMRC scrutiny.

2. Claiming Office Supplies and Stationery

Office supplies and stationery represent some of the easiest business expenses to claim, yet many small business owners overlook them or fail to claim the full amount they are entitled to. Pens, notepads, printer ink, envelopes, folders, and sticky notes might seem like trivial expenses individually, but they accumulate quickly throughout the year. The key to maximising your tax relief is understanding exactly what qualifies and keeping proper records of what you spend.

You can claim office supplies wholly and exclusively for business use, which covers stationery, postage, printer ink and cartridges, computer software subscriptions, and even phone and internet bills if you use them for your business. The critical word here is “exclusively”. If you use something for both business and personal purposes, you cannot claim the entire cost. For example, if you have a home broadband connection that serves both your business and personal browsing, you might claim 60 per cent of the bill if that represents your business use, but you cannot claim 100 per cent. Similarly, if you buy a notebook but use some pages for shopping lists and some for business notes, HMRC expects you to be honest about the split. The principle sounds straightforward, but this is where many business owners slip up by claiming costs without clear business justification.

Start by separating your business and personal purchases completely. Open a dedicated business credit card or use a specific business bank account for all office supplies, software subscriptions, and related costs. This creates a clear audit trail that HMRC will respect. Software subscriptions deserve special attention because they offer particular tax advantages. If you purchase software outright that costs less than £2,000, or if you use subscription based software, you can claim the full cost immediately rather than spreading it over several years. Keep all receipts and invoices, even for small purchases under a fiver. Store them digitally using a simple spreadsheet or filing system, noting what each purchase was for and confirming it was for business purposes. When you maintain clear records like this, you demonstrate to HMRC that you take your tax obligations seriously, which protects you during any enquiry.

Pro tip: Set up a monthly spreadsheet to record office supply purchases as they happen, categorising items by type, so your year end figures are ready immediately and you never miss any claimable costs.

3. Deducting Utility and Rent Payments

Utility and rent payments represent some of the largest expenses most small businesses face, which is precisely why understanding what you can and cannot claim is so important. Whether you operate from a dedicated commercial premises or run your business from a spare room at home, these costs directly affect your taxable profit. The challenge lies in knowing which portions of your bills qualify for tax relief and how to calculate them accurately so you claim the correct amount without attracting HMRC scrutiny.

Rent and utility bills used for business purposes are fully claimable expenses if you operate from a dedicated commercial space. This includes electricity, gas, water, business rates, property insurance, and security costs. The rules become more nuanced when you work from home. If you use part of your home exclusively for business, you can claim a proportion of your household utilities and rent based on the space you dedicate to work. This is where many business owners either claim too much and face penalties, or claim too little and leave money on the table. The key word is “exclusively”. If your spare bedroom serves as both a guest room and occasional office, you cannot claim utility costs for that room because it is not used exclusively for business.

Calculating your home office claim requires honesty and clear documentation. Start by determining what percentage of your home is used for business. If you have a four bedroom house and one room is purely dedicated to your business office, that is roughly 25 per cent of your home. You would then claim 25 per cent of your annual rent or mortgage interest, council tax, business rates, electricity, gas, water, and insurance. Some business owners prefer using the simplified method instead, claiming a fixed amount per month based on the number of hours worked from home. Keep utility bills and tenancy agreements for at least six years in case HMRC investigates your claim. Photograph your workspace to demonstrate it is genuinely used for business, especially if you share your home with others who might question your claim percentages. This straightforward documentation protects you and makes the claiming process transparent.

Pro tip: Request separate meters or sub-metering for your business utilities if possible, as this provides exact figures rather than estimates and removes any ambiguity about what percentage you can rightfully claim.

4. Including Staff Salaries and Wages

If you employ staff, their salaries and wages represent your largest business expense and also your greatest opportunity for tax relief. Many business owners understand they can claim wages, yet they frequently miss out on other staff related costs that qualify for deduction. Beyond basic salary payments, you can claim bonuses, employer’s National Insurance contributions, pension contributions, employee benefits, training costs, and even agency fees for temporary workers. Getting this right not only reduces your taxable profits but also ensures you maintain full compliance with employment law, which protects your business from costly penalties.

Your staff costs including salaries and National Insurance are wholly allowable expenses that reduce your taxable profit directly. This extends far beyond monthly wage payments. If you pay an employee a bonus for hitting targets, that bonus is claimable. If you contribute to your employee’s pension scheme, those contributions count as business expenses. Employer’s National Insurance contributions, which you are legally required to pay on employee earnings above the threshold, are fully deductible. Training costs for staff development qualify too, provided the training relates to the business rather than purely personal interests. Even costs for recruiting staff through recruitment agencies are claimable. The principle underlying all these claims is the same: the expense must be wholly and exclusively for business purposes, not for personal benefit or domestic help. You cannot claim wages for a family member who does not actually work, or claim personal assistant costs for household tasks that have nothing to do with your business.

Accurate payroll records form the foundation of your claims. You must maintain proper documentation showing employee names, salary amounts, dates paid, and National Insurance calculations. HMRC expects this information to align with your self assessment tax return and your employees’ P60 forms. If you employ staff, you are legally required to operate PAYE and report through Real Time Information submissions. This means your payroll is already being monitored by HMRC automatically, so maintaining meticulous records protects you from disputes. Use accounting software that integrates payroll with your business accounts, creating a clear audit trail. When HMRC investigates a business, staff costs often receive close scrutiny because this is where claims can be inflated. By keeping thorough, honest records from the start, you demonstrate your commitment to compliance and reduce your risk significantly.

Pro tip: Set up a dedicated payroll spreadsheet or use cloud based payroll software that automatically calculates National Insurance and pension contributions, ensuring you never miss claimable amounts and your records remain audit ready at all times.

5. Recognising Marketing and Advertising Fees

Marketing and advertising expenses are amongst the most misunderstood business costs when it comes to tax relief. Many small business owners either claim too conservatively and leave money on the table, or claim costs that do not actually qualify and risk HMRC penalties. The good news is that legitimate marketing costs are fully deductible, and the range of what qualifies is broader than most people realise. From social media campaigns to printed brochures, website hosting to trade publication subscriptions, you can claim far more than you might think if you understand the rules.

Your advertising and promotional costs wholly for business are fully claimable as business expenses. This includes print advertising in newspapers and directories, online advertising across search engines and social media platforms, website design and hosting fees, branding work, business cards, brochures and promotional materials, event sponsorships, and subscriptions to trade journals relevant to your industry. The key principle is that the expense must be incurred wholly and exclusively to promote your business or products. If you run a bakery and pay for a local radio advertisement, that is clearly claimable. If you design a website to showcase your services, the design fees and hosting costs are both deductible. However, client entertainment and hospitality do not qualify, nor do most gifts to clients or potential customers. Political donations and anything providing a personal benefit rather than business promotion cannot be claimed. This distinction matters because claiming non qualifying expenses is a serious compliance issue that can trigger investigations.

Track every marketing pound you spend from the moment you start your business. Use a dedicated cost centre in your accounting software or spreadsheet to categorise all marketing expenses together. Keep receipts and invoices for everything, noting the business purpose of each expense. If you hire a marketing agency or freelance designer, request itemised invoices so you understand exactly what services were provided. When you claim website costs, separate the design cost from the ongoing hosting and domain renewal costs, as both are claimable but recorded in different periods. This level of detail might feel excessive initially, but it protects you enormously if HMRC questions your claims. Demonstrate that every pound you claimed served a genuine marketing or promotional purpose, and your claims will withstand scrutiny.

Pro tip: Create a monthly marketing expense checklist covering all potential costs like social media ads, email marketing platforms, design work, and subscriptions, ensuring you capture every deductible expense before the year end deadline.

6. Accounting for Legal and Professional Services

Legal and professional services represent critical investments for any growing small business, yet many owners do not realise how much of these costs can be claimed back as tax deductible expenses. Whether you need an accountant to manage your finances, a solicitor to review contracts, or a surveyor to assess property, these professional fees can substantially reduce your taxable profit when claimed correctly. Understanding what qualifies and what does not is the difference between paying significantly more tax than necessary and optimising your tax position responsibly.

Accountancy fees, legal fees, and professional indemnity insurance premiums are all allowable business expenses when incurred wholly and exclusively for business purposes. This includes costs for accountants preparing your self assessment tax return or managing your business accounts, solicitors handling contract reviews or employment disputes, surveyors assessing commercial property, and architects designing business premises. Bank charges for your business account and interest paid on business loans also count as claimable expenses. However, the rules have important limits. Legal costs related to purchasing property or machinery cannot be claimed as business expenses because they are considered capital expenditure and may instead qualify for capital allowances treatment. Fines or penalties imposed by courts or regulatory bodies are never allowable. Loan principal repayments, unlike interest payments, do not qualify either. These distinctions matter because claiming ineligible costs is a compliance risk that attracts HMRC attention.

The practical approach is straightforward. Keep all invoices and receipts from your professional advisors in a dedicated folder, either physical or digital. When your accountant sends you their annual fee, file that invoice. When you pay a solicitor for contract review, save that receipt. At year end, add up all these costs and claim them collectively under professional fees. If a single invoice covers multiple services, ask for an itemised breakdown so you can verify every component is business related. For instance, if you hire a solicitor for both business contract work and personal estate planning, only the business portion is claimable. Similarly, if your accountant charges a fee covering tax return preparation alongside personal financial advice, clarify what portion relates to your business. Maintaining clear separation between business and personal professional costs protects you during any tax investigation. When you demonstrate that you carefully tracked professional expenses and only claimed legitimate business costs, you build credibility with HMRC.

Pro tip: Request invoices itemised by service type from your professional advisors at year end, create a spreadsheet categorising each expense by type, and cross reference these with your bank statements to ensure every claim is fully documented and defensible.

7. Recording Training and Development Courses

Investing in training and development courses for yourself and your employees is one of the smartest decisions a small business owner can make, and fortunately HMRC recognises this by allowing you to claim these costs as business expenses. Whether you are keeping pace with industry changes, acquiring new technical skills, or developing your team’s capabilities, the costs are fully deductible. The challenge lies in understanding which training qualifies and which does not, as HMRC draws clear lines between business related learning and personal development that falls outside business purposes.

Training courses wholly and exclusively for business are allowable expenses that reduce your taxable profit directly. This includes the course fees themselves, books and materials purchased for the training, travel costs to attend the course, and accommodation if you need to stay overnight. For your employees, you can claim the full cost of training they undertake to improve their job related skills, keep up to date with industry technology, or develop capabilities needed for changes in their role. A graphic designer taking a course on new design software, a plumber attending advanced installation training, or a business manager developing project management skills all qualify. The training must directly support the work they do or prepare them for roles within your business. What does not qualify is training for someone to start an entirely new career, training in subjects unrelated to your business, or personal development courses that do not improve business capabilities. If you send an employee on a general management course that might help them progress into unrelated fields, only the business relevant portions can be claimed, not the entire cost.

Document every training expense meticulously. Keep the course invoice showing the provider, course name, dates, and fees paid. Retain receipts for any related travel, accommodation, and learning materials. Create a simple spreadsheet listing each training activity, who attended, the course title, the business justification, and the total cost. When you face a tax enquiry, this documentation demonstrates that you invested in legitimate business development rather than personal interests. If you employ staff, make similar records for their training, noting how the training improved their job related skills. When you maintain this level of documentation, you show HMRC that you take compliance seriously. You also create a valuable record that helps you assess whether training investments are actually delivering results for your business, allowing you to make smarter training decisions in future years.

Pro tip: Before enrolling in any training course, write a brief note documenting the business reason and expected outcome, then keep this alongside the course invoice to provide clear evidence that the training was wholly for business purposes.

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Unlock Maximum Tax Relief for Your Small UK Business Today

Managing business expenses like travel mileage, office supplies, and staff wages can be complex and time consuming, especially when the rules seem to change or get too detailed. Many small UK business owners find themselves unsure about which costs qualify as legitimate deductions and how to maintain the records HMRC demands. This uncertainty often leads to missed opportunities for tax relief and anxiety over compliance.

KefiHub understands these challenges and offers clear, practical guidance tailored for small firms navigating UK business expenses. From understanding the subtle distinctions of allowable claims to maintaining audit ready records, our expert insights simplify your decision making and maximise your savings. Dive into expert articles like “7 Key Examples of Business Expenses for Small UK Firms” and explore actionable advice on managing your accounts and expenses effectively.

Take control of your business finances now with KefiHub’s trusted UK-based insights platform. Visit KefiHub to access thorough guidance on business expenses, stay ahead of tax regulation changes, and protect your business from costly mistakes. Don’t leave valuable tax relief on the table. Start optimising your business spending today at KefiHub.

Frequently Asked Questions

What types of travel and mileage costs can my small business claim?

You can claim for vehicle costs including fuel, servicing, insurance, and repairs for business-related travel. Maintain accurate mileage logs detailing the date, destination, and purpose of each trip.

How do I determine the amount I can claim for office supplies?

You can claim the full cost of office supplies that are used wholly and exclusively for business purposes. Separate business and personal purchases by using a dedicated account to make it easier to track your expenses.

What portion of my utility bills can I claim for my home office?

If you use part of your home exclusively for business, you can claim a proportion of your rent and utilities based on the space dedicated to work. Calculate this percentage accurately and keep related documents like utility bills and tenancy agreements.

Are training and development costs fully deductible for my staff?

Yes, if the training directly relates to improving job-related skills, you can claim the full cost as a business expense. Keep records of all training expenses including invoices and receipts to ensure your claims are well-documented.

How can I ensure my marketing expenses are legitimate for deduction?

You can claim marketing and advertising costs as long as they are incurred wholly and exclusively for business purposes. Keep detailed records of every marketing expense, including receipts and invoices, to provide valid justification for your claims.

What legal and professional services can my business claim?

You can claim expenses for legal and professional services that are directly related to your business operations, such as accountancy and legal fees. Maintain clear documentation of all such expenses to validate your claims during tax assessments.

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