The expenses small businesses forget to claim

Nobody sets out to overpay tax. It usually happens quietly, through costs that were genuinely allowable and simply never got claimed. Here are the ones we find most often when we take on a new client and look back through their figures.

Working from home

If you are a sole trader or in a partnership, HMRC's simplified expenses let you claim a flat monthly amount based on hours worked from home, with no need to apportion actual bills: £10 a month for 25 to 50 hours, £18 a month for 51 to 100 hours, and £26 a month for 101 hours or more. That is up to £312 a year with no receipts to keep.

It is deliberately modest, which is why the alternative matters. You can instead claim a fair business proportion of your actual costs, and for anyone genuinely working from home full time with a dedicated room, actual costs are usually the larger claim. The flat rate is the convenient option, not automatically the best one.

Worth knowing: simplified expenses are only available to sole traders and partnerships. Limited companies cannot use them.

Mileage

The approved mileage rates are 45p per mile for the first 10,000 business miles in a car or van, then 25p per mile above that, and 24p per mile for motorcycles at any distance. A sole trader covering 12,000 business miles can claim £4,750, and needs only a mileage log rather than a folder of fuel receipts.

The trap is that this is a one-way door for each vehicle. Once you use the mileage rate for a particular vehicle you must keep using it for that vehicle, and you cannot also claim capital allowances on it. For an expensive or heavily used vehicle, actual costs plus capital allowances can be worth considerably more. Decide before you claim, not after.

Costs incurred before you started trading

Pre-trading expenditure is routinely missed. Costs incurred in the period before you began trading can generally be treated as incurred on your first day of trading, provided they would have been allowable had the business already been running. Equipment, professional fees, software, initial marketing: all of it is potentially claimable, and almost nobody thinks to go back and look.

Professional subscriptions and training

Subscriptions to professional bodies on HMRC's approved list are allowable. Training that maintains or updates skills used in your existing business is generally allowable too. The distinction that matters is between keeping current in what you already do, which is usually fine, and acquiring a new skill to enter a different trade, which usually is not.

The small recurring ones

• Software and cloud subscriptions. Accounting software, design tools, storage, password managers. Individually small, collectively not.
• Bank charges and interest on business accounts and borrowing.
• Bad debts. If you have genuinely written off an invoice you will never collect, it can come off your profit.
• Protective clothing and branded uniform, though ordinary clothing worn for work is not allowable however smart it needs to be.
• Use of your own phone and broadband, apportioned to business use.
• Accountancy fees. Yes, really. They are a business expense.

The trading allowance

If you have small amounts of self-employed income, the £1,000 trading allowance lets you take a flat £1,000 deduction instead of claiming actual expenses. Where real costs are under £1,000, it is the better option and requires no records at all. Where they are over, claim the actual costs.

What actually fixes this

None of the above is exotic. It gets missed for one reason: the records are not good enough at the point the return is prepared, so anything uncertain gets left out. The single highest-return change most small businesses can make is a separate business bank account and receipts captured as they happen rather than reconstructed in January.

Once your bookkeeping is current, claiming everything you are entitled to stops being an archaeology exercise and becomes automatic.

Sources: HMRC simplified expenses flat rates and approved mileage allowance payments, GOV.UK, rates current for 2026/27.