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What Can I Claim? A Comprehensive List of Allowable Business Expenses

For any business owner, understanding what you can legally claim as a business expense is one of the most powerful ways to improve profitability. Claiming allowable expenses reduces your taxable profit, which in turn reduces your tax bill.

The golden rule from tax authorities like HMRC (UK) and the IRS (US) is that an expense must be “wholly and exclusively” for business purposes. If an expense has a dual purpose (both business and personal), you can usually only claim the business portion.

Here is a comprehensive list of common allowable business expenses.

1. Office & Administrative Costs

These are the day-to-day costs of running your business operations.

  • Stationery: Printer ink, paper, pens, folders.

  • Postage and Shipping: Stamps, courier costs, packaging materials.

  • Printing and Photocopying: Costs for business documents.

  • Phone and Internet: You can claim the business portion of your bills. If you have a single contract, you’ll need to reasonably apportion usage (e.g., 40% personal, 60% business).

  • Software Licenses: Subscription fees for cloud software (e.g., Microsoft 365, Adobe Creative Cloud, accounting software like Xero or QuickBooks).

  • Bank Charges: Business account fees, transaction charges, and interest on business loans.

  • Professional Fees: Accountant, bookkeeper, lawyer, or business consultant fees.

2. Travel Expenses

Costs incurred while traveling for business.

  • Vehicle Expenses: You have two main options:

    • Mileage Allowance: Claim a fixed rate per business mile (e.g., 45p/mile for the first 10,000 miles in the UK, 67.5¢/mile in the US for 2024). This is often simpler and covers all running costs.

    • Actual Costs: Claim the business proportion of actual costs like fuel, insurance, repairs, servicing, road tax, and loan interest. This requires detailed record-keeping and you cannot claim the initial purchase price of the car under this method.

  • Public Transport: Train, bus, plane, and taxi fares for business trips.

  • Accommodation: Hotel costs for business trips away from home.

  • Meals: Reasonable cost of food and drink during overnight business trips (Note: Rules are strict; you generally cannot claim for everyday lunches).

3. Staff Costs

Costs related to employing staff.

  • Salaries and Wages: Gross pay for employees.

  • Bonuses and Commission: Performance-related payments.

  • Employer’s National Insurance Contributions (UK) / Payroll Taxes (US): The portion you pay as an employer.

  • Pension Contributions: Employer contributions into a registered pension scheme.

  • Employee Benefits: Costs of providing perks like private health insurance.

  • Training: Costs for training that relates to your employees’ current roles. (Training for a new skill is not usually allowable).

  • Recruitment Agency Fees: Costs of hiring new staff.

  • Subcontractor Costs: Fees paid to freelancers or contractors.

4. Premises & Running Costs

Costs associated with your place of business.

  • Rent: For business premises.

  • Business Rates (UK) / Property Taxes (US): On business premises.

  • Utilities: Gas, electricity, water, and council tax for your business property.

  • Insurance: Business contents, public liability, professional indemnity insurance.

  • Security: Alarm systems, security patrols.

  • Cleaning: Cleaning services and materials for business premises.

  • Repairs and Maintenance: Fixing a leak, repainting, or servicing the HVAC system. (Note: Major improvements that add value, like an extension, are considered “capital expenses” and are treated differently, often through capital allowances).

5. Cost of Goods Sold (COGS)

Direct costs of creating the products you sell.

  • Raw Materials: Items you purchase to make your products.

  • Stock for Resale: Inventory you buy to sell on.

  • Direct Labour: Wages of employees directly involved in production.

  • Manufacturing Overheads: Factory rent, specific machinery costs.

  • Packaging: Boxes, labels, and wrapping for your products.

6. Marketing & Advertising

Costs of promoting your business.

  • Website Costs: Domain registration, hosting, and maintenance.

  • Online Advertising: Google Ads, social media ads.

  • Print Advertising: Flyers, brochures, magazine, and newspaper ads.

  • Business Cards and Stationery.

  • Sponsorship of Local Events.

  • Market Research.

7. Clothing Expenses

  • Uniforms: Clothing that identifies you as an employee (e.g., a polo shirt with a company logo).

  • Protective Gear: Safety boots, hard hats, high-visibility jackets, and overalls required for your work.

  • Costumes: For actors or performers.

  • What You CANNOT Claim: Everyday clothing, even if you only wear it for work (e.g., a suit for an office job).

8. Use of Home Expenses

If you work regularly from home, you can claim a portion of your household costs. There are two main methods:

  • Simplified Method (Flat Rate): Claim a fixed amount per hour you work from home (e.g., £6/week in the UK, a prescribed rate per square foot in the US). No need to keep bills.

  • Actual Cost Method: Claim a proportional amount of your actual costs based on the space and time used for business. This includes:

    • Heat and Light: A percentage of your gas and electricity bills.

    • Internet and Phone: The business-use portion.

    • Council Tax / Mortgage Interest / Rent: A percentage based on the number of rooms used for business.

9. Professional Development & Subscriptions

  • Subscriptions: Membership fees for professional trade bodies or journals that are relevant to your business (e.g., a plumber’s membership in a trade association).

  • Course Fees: Training that updates or enhances the skills and knowledge you currently use in your business. (Courses that train you for a new trade are not allowable).

10. Capital Expenses (Assets)

These are larger items you buy to use in your business, not consume. You typically cannot claim the full cost immediately.

  • Examples: Equipment, machinery, business vehicles, computers, office furniture.

  • How to Claim: Through:

    • Capital Allowances (UK): You can claim a portion of the value each year (e.g., Annual Investment Allowance lets you deduct the full value of most assets up to a £1 million threshold).

    • Depreciation (US): You deduct the cost over several years according to its “useful life” via IRS schedules (e.g., Section 179 allows for immediate expensing up to a certain limit).

11. Other Allowable Expenses

  • Client Entertainment: While you can claim the cost of entertaining your staff (e.g., a Christmas party), the cost of entertaining clients is generally not an allowable expense for tax purposes, though it is still a legitimate business cost to record.

  • Bad Debts: Money owed to you that you have written off as unrecoverable.

  • Donations to Charity: If made from the business.

The Golden Rule: Record Keeping

You must keep evidence of all your expenses. This includes:

  • Receipts (paper or digital)

  • Invoices

  • Bank Statements

  • Mileage Logs

Good records are your best defense in the event of a tax audit and ensure you claim every penny you’re entitled to.