Business Expenses 2025 What You Can & Can’t Claim

Running a business in the UK is not an easy task. There are many financial responsibilities that a business owner needs to take. Business owner needs to understand which expenses are allowable for tax purposes and which not. As we move through 2025, HMRC continues to provide clear guidelines on what business expenses are deductible—and which ones aren’t.

If you’re a sole trader, freelancer, or run a limited company, it’s important to know which business expenses you can and can’t claim. This guide will help you understand the basics for 2025 so you can stay compliant and save on tax.

What You Can Claim as Allowable Business Expenses

Allowable business expenses are costs that are “wholly and exclusively” incurred for business purposes. These reduce your taxable profit and ultimately your tax bill.

Here are the main categories that can be claimed:

Office and Workspace Costs

You can claim a range of office-related expenses to reduce your tax bill. These include everyday items like stationery, printer ink, postage, and software subscriptions such as Microsoft 365, Adobe, or Xero. If you work from a home office, you may also claim a portion of your rent or mortgage interest, electricity, gas, internet, and phone bills based on how much of your home is used for business. Alternatively, HMRC offers a simplified flat-rate method for home office claims, which can be easier to calculate and manage.

Travel and Transport

If you travel for business purposes—such as visiting clients, attending meetings, or going to a work event. These include fares for trains, buses, flights, or taxis, as well as hotel accommodation and meals during your trip. If you use your personal car for business travel, you can claim a mileage allowance of 45p per mile for the first 10,000 miles. However, it’s important to note that daily commuting from home to your regular workplace is considered personal travel and cannot be claimed as a business expense.

Staff Costs

You can claim business expenses for staff-related costs such as salaries, bonuses, employer’s National Insurance contributions, pension payments, and training courses—as long as the training is directly related to the employee’s current role. However, if you’re a sole trader, you can’t claim your own salary, but you can still claim expenses for hiring staff or subcontractors who help run your business.

Business Premises

If you run your business from a rented office, you can claim a variety of expenses to reduce your taxable income. These include rent payments, utility bills (such as electricity and water), business rates, and any necessary repairs or maintenance carried out on the premises. However, if you own the building, you won’t be able to claim rent, but you may still be able to claim a portion of costs like mortgage interest, as well as repairs and maintenance directly related to business use.

What You Can’t Claim

Personal Expenses

You can’t claim expenses that aren’t used solely for business purposes. This includes personal holidays, meals or drinks that aren’t part of work-related travel and everyday clothing. HMRC only allows claims for costs that are entirely and exclusively for business use, so anything with a personal element is not eligible.

Capital Items Without Depreciation

Big-ticket purchases such as equipment or machinery can’t be claimed as regular business expenses. Instead, they usually need to be claimed under capital allowances. It’s important to note that depreciation isn’t an allowable deduction for tax purposes. Instead, businesses can use the Annual Investment Allowance (AIA) to claim the full cost of qualifying assets, up to a certain limit, in the year they’re purchased. This helps reduce your taxable profit more effectively.

Conclusion

Knowing what you can and can’t claim as business expenses in 2025 helps you save on tax and keep your accounts accurate.

A simple rule to remember: if the cost is only for your business, you can probably claim it. But if you’re unsure, it’s best to ask a professional accountant.

Keeping track of your expenses also helps you stay on the right side of HMRC and gives you a better idea of how much profit your business is really making.