When running a small business, every cost matters. Yet many business owners miss out on legitimate tax-deductible expenses, which means they may be paying more tax than necessary.
Understanding what expenses you can claim is an important part of small business tax planning. Even small costs, when added together over a year, can significantly reduce your taxable profits and help improve your overall cash flow.
Below are five of the most commonly overlooked allowable expenses for small businesses and self-employed individuals.
1. Use of Home as an Office
With more people running businesses from home, home office expenses are one of the most commonly missed tax deductions.
If you work from home, even occasionally, you may be able to claim a portion of your household costs as a business expense. These can include:
- Gas, electricity and water
- Council tax
- Broadband and phone bills
- Rent or mortgage interest
HMRC allows business owners to either use a flat-rate allowance (currently £6 per week) or calculate a proportion of actual household costs based on the amount of space and time used for business activities.
While the flat rate is simple, calculating actual costs may result in a larger deduction depending on your circumstances.
2. Business Mileage
Another expense small businesses often forget to claim is business mileage when using a personal vehicle for work.
If you use your own car for business travel, you can claim mileage at HMRC’s approved rates:
- 45p per mile for the first 10,000 miles
- 25p per mile after that
Many people remember large trips to meetings or clients, but forget smaller journeys such as visiting suppliers, attending networking events, or trips to the post office. These miles add up over time.
It’s important to keep a simple mileage log showing the date, destination and purpose of each journey.
Note that commuting to a regular workplace does not qualify as business mileage.
3. Training and Professional Development
Investing in your skills is good for your business, and in many cases it’s also tax deductible.
Training courses, workshops, seminars and professional memberships may be claimed as expenses if they are directly related to maintaining or improving skills required for your current business.
For example, a marketing course for a marketing consultant or software training for a designer would typically qualify. However, training that prepares you for an entirely new career may not be allowable.
Many small business owners forget to claim these costs, even though continuous professional development is often essential for staying competitive.
4. Subscriptions and Business Software
Modern businesses rely heavily on digital tools, and many of these subscriptions qualify as allowable business expenses.
Common examples include:
- Accounting software such as Xero
- Cloud storage or productivity tools like Microsoft 365 or Google Workspace
- Design software such as Canva or Adobe
- Industry journals or professional membership subscriptions
Because these payments are often small monthly charges on a card or direct debit, they can easily be overlooked when preparing accounts. However, over a full year they can represent a meaningful deduction.
5. Bank Charges and Financial Fees
Many business owners forget that bank charges and financial fees are tax deductible.
These expenses can include:
- Business bank account fees
- Overdraft interest
- Charges on business loans
- Payment processor fees such as PayPal, Stripe or card processing charges
Because these fees are often buried within bank statements, they are frequently missed when calculating business expenses.
Ensuring these costs are recorded properly can help reduce taxable profits.
Why Claiming All Business Expenses Matters
Missing legitimate expenses means paying more tax than necessary. By keeping accurate records and understanding what qualifies as an allowable cost, small businesses can reduce their taxable profits while staying fully compliant with HMRC.
Good bookkeeping, organised receipts and regular reviews of your expenses make it much easier to capture these deductions throughout the year. If you are not sure what you can claim, why not contact us?
