Your Complete Guide to Business Expenses

Can you put a meal out on your business expenses? And how about petrol? If you are an SME owner, then get to know the rules with our complete guide to business expenses. It’s business finance management made easy.

Types of Expenditure

All business will have monthly outgoings. After all, you have to spend money, to make money. And these outgoings or expenditure will fall into 3 different groups:

•    Capital
•    Business
•    Private

And these will cover things such as advertising, insurance, postage, travel expenses and safety wear. But for the purpose of this blog we will be concentrating on ‘business’ expenses.

Business Expenditure Explained

Tax reliefs for business expenditure are available if the cost is ‘wholly and exclusively’ for the purpose of earning the business money. The most common business expenses claimed (and allowed) are:

•    Cost of stock or equipment
•    Payroll costs
•    Premises or maintenance costs
•    Travel expenses
•    Administration costs

There’s no total limit to how much you can claim, but all purchases must be evidenced by a VAT receipt. Staff can have the following amounts reimbursed:


The cost of public transport but the cheapest mode should be chosen. If traveling overseas the cost must be converted into pounds sterling showing the exchange rate.
If driving, 45p per mile can be claimed up to 10,000 miles per year, or when using a company car between 15p and 26p for petrol and 12p to 18p for diesel.

Parking and Tolls

The full cost.


The full cost. If you stay with friends or family during a business trip to save costs, you can claim £25 per night without receipts.

Food and Drink

Lunch, breakfast if beginning to travel before 7:00am, and an evening meal if working late, can all be claimed with receipts.

Personal Incidental Expenses

Also known as PIEs, these can be things like laundering clothing or magazines. £5 per night can be claimed in the UK and £10 per night if overseas.
The full cost will also be reimbursed for relevant professional training, professional subscriptions, as well as telephone calls or internet usage for business reasons.

But what happens if you go on a 2 day trip to London, and only 1 of the days you have a meeting, the other you spend shopping? Can you make a claim of business expenditure? In short, no. This is not allowed.

Special Rules

There are a few exceptions to the rules where special arrangements will be made. These exceptions include:

•    Working on board a ship
•    Working or living abroad
•    Coming to work in the UK

If You Sometimes Work From Home

If you sometimes work from home, or even full time, you may be able to claim business expenses for the running cost of your home. This could be for light and heating, telephone and broadband, council tax or insurance.
There are a few things to bear in mind though. If you claim you have an office in your home purely for business use then you may be expected to pay tax if you make a profit when it comes to selling the property. And when a business area it must only be used for this purpose, it can’t be a living room where the kids are playing for example.

Now you know the basics of business expenses do you feel confident in what you can claim? You may save a lot of money!

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