The test that decides everything
A cost is allowable if it was incurred wholly and exclusively for the business. That is the whole test. Where people slip up is assuming that mostly for the business is close enough, and it is not, unless the cost can be split cleanly.
A phone bill splits. A suit does not, because you could wear it to a wedding. That distinction explains nearly every answer below.
Five people routinely miss
- Working from home, either the flat rate or a share of the actual bills
- Professional subscriptions and trade body memberships
- Software and tools you bought personally in year one, before the business account existed
- Bank charges, card fees and card reader percentages
- Training that keeps your existing skills current
The last one has a catch. Keeping a skill current is allowable; learning an entirely new one usually is not. A designer taking an advanced course in their own software is fine. The same designer retraining as an electrician is not.
“Nobody has ever been questioned over a software subscription. Plenty have been over lunch.”
Three that cause questions
Client entertaining is the big one. It feels like a business cost because it is, but it is specifically not allowable for tax, so it stays in your management figures and gets added back for the return.
Everyday clothing is the second, including the smart shirt you only bought for a pitch. Protective kit and a proper uniform with your logo on are different.
The third is the daily coffee. Working from a café does not make the coffee a business cost unless you are travelling away from your usual place of work.
Home office and mileage
For working from home, the flat rate is simple and rarely queried. Claiming a share of your actual rent, heating and broadband gives a bigger number but needs a calculation you can defend, based on rooms and hours.
For driving, claim the approved mileage rate rather than fuel receipts. It covers fuel, wear and tear and insurance in one figure, and all you need to keep is a note of the journey, the date and the reason.
A one-line note per journey is enough. A spreadsheet nobody fills in is not.
What to do with the grey ones
Send it to us with one line about what it was for. Most answers take thirty seconds, and the ones that do not are exactly the ones worth asking about.
Claiming something borderline is not a disaster. Claiming it without being able to say why, eighteen months later, is the part that costs you.
