Allowable expenses
An allowable expense is a cost you can deduct from your profit before tax, and one test decides nearly all of them: was it incurred wholly and exclusively for the business? Most disputes with HMRC are not about whether you spent the money. They are about whether you also got something personal out of it.
Updated 14 September 2026 · Tax year 2026/27
Allowable expenses and disallowable expenses #
What are allowable expenses, in one line: costs you can deduct from income before tax is calculated. Allowable expenses self employed traders claim and allowable expenses limited company directors claim start from the same test, though the second is stricter, as below. Disallowable expenses are real costs the business paid that tax law does not let you deduct.
| Item | Why | |
|---|---|---|
| Yes | Tools and specialist equipment | Wholly for the business |
| Yes | Protective clothing and branded uniform | Not ordinary clothes you could wear anywhere |
| Yes | Business travel and mileage | Not ordinary commuting to a permanent workplace |
| Yes | Subsistence on a business journey | Reasonable cost while away, not every lunch |
| Yes | Accountancy and professional fees | For the business, not personal tax planning |
| Yes | Use of home as office | Flat rate or a fair proportion of actual costs |
| No | Ordinary clothing you also wear outside work | Even if you only wear it for work |
| No | Commuting from home to a permanent workplace | Travel to work is not business travel |
| No | Client entertaining | Never deductible, however business-related |
| No | Fines and penalties | Including parking fines incurred on business |
The uniform tax rebate #
This is the most claimed and least understood relief in the list, largely because of how it is advertised.
A work uniform tax rebate is tax relief on the cost of cleaning, repairing or replacing a uniform or protective clothing your job requires. It is not a payment for buying it, and it is not a rebate on the clothing itself.
| Trade | Flat rate expense | Worth at 20% |
|---|---|---|
| Most jobs with no specific rate | £60 | £12 |
| Joiners and carpenters | £140 | £28 |
| Police officers, to chief inspector | £140 | £28 |
| Nurses and healthcare workers | £125 | £25 |
| Airline cabin crew | £720 | £144 |
| Airline pilots | £1,022 | £204 |
How to claim uniform tax relief: directly with HMRC, online or on form P87, free. Claims can normally be backdated 4 tax years. Agencies that offer to handle it for a percentage are charging for a form you can submit yourself in a few minutes.
The clothing itself is only allowable if it is protective or carries a permanent, conspicuous logo. Ordinary clothes bought purely for work are not, however strictly you keep them for it.
Use of home as office #
Two ways to claim, and use of home as office HMRC rules let you pick.
The simplified flat rate, for the self-employed, needs no records beyond the hours you work at home:
| Hours worked from home each month | Use of home as office allowance | Per year |
|---|---|---|
| 25 to 50 | £10.00 a month | £120.00 |
| 51 to 100 | £18.00 a month | £216.00 |
| 101 or more | £26.00 a month | £312.00 |
The actual cost method takes a fair proportion of rent or mortgage interest, council tax, insurance, heat, light and broadband, usually apportioned by rooms and by the time each is used for business. It takes more work and is normally worth considerably more than £312.00 a year.
Note that the flat rate does not cover telephone and internet, which are claimed separately on actual business use. Directors of limited companies cannot use the simplified rates at all, and should either claim the HMRC homeworking allowance or put a formal licence in place between themselves and the company.
Travel, mileage and subsistence #
Business travel is allowable. Ordinary commuting to a permanent workplace is not, and the line between them is where most travel claims fail.
If you use your own vehicle, the simplest route is approved mileage rather than actual running costs. The mileage allowance calculator works out the claim at current rates, including the relief due where an employer reimburses you below the approved amount.
What is subsistence expenses, in practice: the reasonable cost of food and drink while you are away from your normal workplace on business. A meal on a genuine business journey is allowable. Lunch near the office on an ordinary day is not, because you would have eaten anyway.
Landlords and rental income #
Allowable expenses for rental income follow the same wholly and exclusively test, but two differences matter.
- Mortgage interest is not deducted as an expense on residential lettings. It attracts a basic rate tax reducer instead, which is worth less to higher rate taxpayers
- Repairs are allowable; improvements are not. Replacing a broken window is a repair. Replacing single glazing throughout with double glazing is an improvement, and goes against capital gains instead
Otherwise allowable expenses for landlords cover letting agent fees, insurance, ground rent and service charges, council tax and utilities where you pay them, and the replacement of domestic items on a like-for-like basis.
Limited companies and employees #
Allowable expenses limited company rules are stricter than the self-employed ones in a way that catches directors out.
Allowable expenses for employees HMRC accepts, and allowable expenses for employees HMRC will challenge, are a narrower set than the self-employed one. For a company's own trading costs the test is wholly and exclusively. For expenses of a director or employee it adds a word: wholly, exclusively and necessarily in the performance of the duties. "Necessarily" means the job could not be done without it, not merely that it was helpful.
Where the company pays something that fails that test, it does not simply become disallowable. It usually becomes a benefit in kind reportable on a P11D, with Class 1A National Insurance for the company and Income Tax for the individual. That is worse than not claiming it.
Claiming them #
Allowable expenses self assessment claims go in the self-employment pages of your tax return, either as a single total if turnover is below the threshold or broken into categories above it. Employees claiming job expenses use P87 or their tax return instead.
The deadlines and the mechanics are in Self Assessment deadlines, and if you are a subcontractor whose deductions have already been taken at source, the CIS refund calculator shows what expenses do to the refund you are owed.
Common questions #
What are allowable expenses?
Costs incurred wholly and exclusively for the business, which are deducted from income before tax is worked out. If a cost has a private element too, it is generally not allowable unless the business part can be identified separately.
What are allowable expenses for self employed people?
Stock and materials, tools, business travel and mileage, use of home as office, accountancy fees, insurance, protective clothing and branded uniform, subsistence while away on business, and training that maintains an existing skill.
What is the difference between allowable expenses and disallowable expenses?
Allowable expenses reduce your taxable profit. Disallowable expenses do not, even though the business genuinely paid them. Client entertaining, fines, ordinary clothing and commuting are all real costs that are never deductible.
What is the uniform tax rebate?
Tax relief on the cost of cleaning, repairing or replacing a work uniform or protective clothing. Most employees claim a flat rate of £60 a year, which is worth £12 to a basic rate taxpayer, because you get relief at your tax rate rather than the allowance itself.
How do I claim uniform tax relief?
Through HMRC directly, free of charge, either online or on form P87. You do not need an agent, and the claim can normally be backdated 4 tax years. Companies that offer to do it for a share of the refund are charging for something HMRC does for nothing.
What can I claim for use of home as office?
Either the simplified flat rate of £10, £18 or £26 a month depending on the hours you work from home, or a fair proportion of your actual costs. The flat rate is easier and needs no records beyond the hours; the actual method is usually worth more.
What is subsistence expenses?
The cost of food and drink while travelling on business, away from your normal workplace. It is allowable where the journey is genuinely a business one. Everyday lunch near your usual place of work is not.
Are allowable expenses different for a limited company?
The principle is the same but the test is stricter for employees and directors: an expense must be incurred wholly, exclusively and necessarily in performing the duties of the employment. A cost the company pays that fails that test can become a benefit in kind.