What expenses are tax-deductible for businesses?
What are the expenses I am allowed to deduct in my small business?
Business expenses you incur to run your business can be deducted from your taxable profits. This includes costs like:
Rent for business premises
Office equipment
professional fees, like advertising and marketing
Subcontractor/staff costs
A portion of home running bills whilst working from home
Travel to meet a client or peer for business development purposes
Computer software and hardware costs
This list is by no means exhaustive and there may be expenses you can expense that another business can’t justify. The key is to expense activities that relate to your business day to day running and growth. Keeping accurate records and receipts is essential to justify each deduction.
The Most Common Deductible Business Expenses
Premises and office costs: Rent, business rates, utilities, maintenance, and repairs.
Equipment and supplies: Computers, printers, stationery, software subscriptions.
Professional services: Accountant fees, legal advice, HR support.
Travel and subsistence: Mileage for business trips, public transport, overnight accommodation, reasonable meal costs.
Marketing and advertising: Website hosting, social media ads, promotional materials.
Training and professional development: Courses and seminars that improve your business skills.
Home office costs: A proportionate share of rent, utilities and broadband if you work from home regularly.
Are home office expenses fully deductible?
Short answer: If you work from home, you can claim a reasonable percentage of your household costs as business expenses. The amount depends on how much space and time you use for your business.
Deeper explanation: For a small business in Edinburgh and London, the home‑office allowance could include a portion of rent or mortgage interest, council tax, electricity, heating and business broadband line. The easiest way to claim is to use HMRC’s flat‑rate allowance based on hours worked at home per month. Alternatively, you can claim a proportion of actual costs, but you need detailed records. Talk to a local tax adviser to determine which method suits your situation.
How long should I keep receipts and records?
Short answer: HMRC recommends keeping receipts and records for at least five years after the 31 January submission deadline of the relevant tax year. This allows you to verify any deductions if HMRC requests evidence.
Deeper explanation: Good record‑keeping protects you if HMRC raises questions later. Using digital tools to scan and store receipts can make the process simple. For example, you might keep receipts for laptop purchases, travel tickets and advertising invoices in cloud storage and tag them by category and date. Many accountants, like Mirandus Accountants in Edinburgh and London, offer secure online portals for clients to upload documents.
Can I deduct entertaining clients?
Short answer: Client entertainment—such as lunch meetings or sporting events—is generally not tax‑deductible for tax purposes. However, certain staff entertainment costs, like an annual staff party up to £150 per person if you are a limited company structure only, are allowable.
Deeper explanation: The rules around business entertainment are strict. While you can pick up the tab for an existing client dinner, you can’t claim that expense against your taxes. Staff entertainment if a limited company, on the other hand, is deductible if it is open to all employees and within the cost limit. Always separate staff and client entertainment costs in your records.
When in doubt, ask an expert
As a small-business owner, you’re focused on serving your customers and growing your company. Keeping track of allowable expenses shouldn’t be a burden. If you’re uncertain about a particular expense—such as whether a new software subscription is capital or revenue expenditure—chat with a local accountant.
Free download: Business expenses checklist
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Free download: Business expenses checklist ~
To make expense tracking easier, download our Small Business Expense Checklist. It lists common deductible items, UK tax thresholds, and record‑keeping tips. Save it to your phone or print it and keep it in your office for quick reference.
Let’s talk — we’re here to help
If you’d like personalised advice, book a no‑obligation consultation. As an Edinburgh and London‑based accounting and financial-planning firm, we help local entrepreneurs optimise their taxes and manage cash flow.
Call or email us today and ask for our “best accountant near me” support—we’ll be happy to answer your questions.
