Can I put this through the business?

The Question Every Business Owner Asks

If I had a pound for every time someone asked “Can I put this through the business?” I’d be on a yacht by now, not writing blog posts.
My answer very often is something along the lines of ‘It depends’ or ‘Potentially’ or ‘What was the reason you incurred that expense’.

It depends on why you bought it, how it relates to your business, and whether HMRC would see it the same way you do. Because the truth is the name on the receipt or the type of item you purchased isn’t what really matters.

This isn’t about whether your coffee was from Pret or Greggs, it’s about whether there’s a clear business jusitification behind the spend and whether you can justify that if HMRC ever asks.

This is where proper year end accounts and corporation tax planning make a real difference.

The Golden Rule: “Wholly and Exclusively”

This is HMRC’s favourite phase when assessing whether the expense you are trying to use to reduce your tax bill is claimable or not, it will become yours too once you understand the logic and reasoning behind it.

For a business expense to be deductible for tax purposes it must be incurred “wholly and exclusively for the purpose of the trade.” In plain English: if the expense wasn’t entirely and directly related to the running of your business, you might struggle to claim it.

Let’s take a few examples:

A Zoom subscription you use for client calls? Claimable
A gym membership to keep you “sharp at work”? HMRC won’t buy it
Lunch with a potential client to discuss a project? Tempting, but still not claimable (more on entertainment rules later)

Let’s take a look at a couple of nuanced examples:

A hairdresser buys hair extensions that are solely used for clients? Claimable
An influencer purchases an item that they use in an unboxing video? HMRC won’t buy it

The Common Grey Areas

Not every expense fits neatly into ‘clearly claimable’ or ‘obviously personal’ and there are several key areas where most people get tripped up, here are some everyday categories where people get caught out:

Travel and Mileage:

Claimable: If you’re travelling for business reasons, meetings, events, site visits and most importantly to different places of work

Not Claimable: If you’re commuting from home to your regular place of work, that’s classed as “ordinary commuting” by HMRC and is not claimable

Working From Home Costs:

If you work from home you can claim a portion of your bills (like electricity, broadband, rent and rates) but only the business portion
HMRC offers a flat rate shortcut based on how many hours you work a month if you don’t want to do a detailed apportionment

Clothing:

Only specialist workwear or uniforms are claimable
A blazer that makes you look professional? Not claimable
Steel toed boots for working on construction sites? Claimable

Meals & Entertainment:

Lunch with a client is generally not deductible for tax (even if it leads to a won contract)
Staff entertainment like a team meal? That’s fine – within limits (£150 per head annually)
Coffee or a snack during a long work day? Only if it’s travelling outside your typical working routine

Equipment & Subscriptions:

Laptops, software and subscriptions (Zoom, Canva, Xero) are generally claimable if they’re used for the business
Personal Disney + subscriptions used for creative inspiration whilst you catch up on the latest Star Wars series? That’s a stretch

Still have questions? Contact us

How To Defend a Business Expense (If HMRC Ever Asks)

Claiming expenses isn’t just about what feels right, it’s about whether you can back it up with logic, records and intent. HMRC doesn’t need you to write a novel but you do need to be able to clearly show:

Why It Was Incurred:

Ask yourself: What business purpose did the expense directly serve?

Did it help you generate income?
Was it necessary in order to deliver your product offering/service?
Would you have bought it if you weren’t running the business? (Duality of purpose)

What Evidence You Have:

Keep:

Receipts or invoices
A note (even brief) explaining and justifying what it was for
Any supporting info (emails, contracts, event details)

How You Paid For It:

Using a business bank account helps immensely here, if you paid personally keep a record of the reimbursement trail

When You Bought It:

Link it into your businesses trading timeline, if your business wasn’t active at the time HMRC might say it was a personal cost, if however it clearly links to a milestone in the business such as it enabled you to begin generating revenue that will be go in your favour

Can I Claim This Expense? Ask Yourself These 3 Questions:

Was this wholly and exclusively for my business?
If you bought it for personal as well as business use (duality of purposes) tread carefully, HMRC needs it to be entirely business related

Can I clearly explain how it helped me generate income or run my business?

Think: Did it help deliver my service? Was it an essential cost to allow me to operate

Do I have proof?

A receipt, invoice or a note that backs up the what, why and when

Bonus Rule Of Thumb:

If it feels like a grey area then it probably is, keep a note and ask your accountant
Still not sure if something counts? Feel free to get in touch so we can help you focus on what you do best

Unsure what you can claim? Schedule an intro call