This is one of those questions that sounds simple until someone says, "Well, technically I did use it for work," and we suddenly find ourselves discussing whether a family meal, a new wardrobe and a weekend in Cornwall count as business expenses.
This is one of those questions that sounds simple until someone says, "Well, technically I did use it for work," and we suddenly find ourselves discussing whether a family meal, a new wardrobe and a weekend in Cornwall count as business expenses.
They do not.
But let's talk about what does.
The rule HMRC actually cares about
The test for most business expenses is whether the cost was incurred wholly and exclusively for the purposes of the business.
That phrase does a lot of work.
It means the expense has to be genuinely for business, not partly for business and partly because you fancied it.
A laptop you use for work? Yes.
A laptop you use for work and also for watching Netflix? More complicated.
A meal with a client where you discussed a project? Possibly.
A meal with your family where you briefly mentioned work? No.
Some common ones that do qualify
Office costs — rent, utilities, stationery, postage.
Equipment and tools you genuinely use for work.
Professional subscriptions and memberships relevant to your trade.
Travel costs for genuine business journeys (not your normal commute).
Staff costs, including wages and employer pension contributions.
Professional fees — accountants, solicitors, business advisers.
Marketing and advertising costs.
Training that is directly relevant to your current work.
Some common ones that do not
Your normal commute to a regular place of work.
Clothing that could be worn outside of work (even if you only wear it for work).
Personal meals and entertainment.
Anything with a significant personal element, even if there is some business connection.
The grey areas
This is where it gets interesting.
Working from home costs can be claimed, but only the business proportion.
A phone used for both personal and business calls needs to be split.
A client lunch might be allowable, but entertaining clients is often not deductible for Corporation Tax purposes even if it is a genuine business cost.
The rules are not always intuitive, which is why it is worth asking rather than guessing.
The rule is not that every expense must be dull
It is simply that there should be a genuine business reason behind it.
If you are unsure, ask us first. We would much rather have a five-minute conversation now than a very creative conversation with HMRC later.
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Hancock & Hastings
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