Episode 5 – The Essential Allowable Expense Checklist

 

Why allowable expenses matter for small businesses

To reduce taxable profit — and thereby lower corporation tax or personal tax — you must claim all legitimate business expenses. This can include costs such as home-office use, mileage, software subscriptions, rent, travel, insurance and professional fees — as long as they’re incurred “wholly and exclusively” for business purposes.

Yet many small businesses under-claim or mis-classify expenses, losing relief and overpaying tax.

Common mistakes that cost money

• Mixing personal and business expenses — e.g. home and personal phone bills, weekend use of a vehicle claimed as business mileage, unclear receipts for mixed personal/business trips

• Delaying expense logging until the end of the tax year — leading to forgotten items or disallowed claims

• Not keeping documentation (invoices, receipts, mileage logs) — which increases risk if HMRC queries your return

How disciplined bookkeeping makes a difference

When you use bookkeeping software or engage a bookkeeping service, every expense gets logged correctly and promptly. That ensures:

• Better visibility over deductible costs — helping reduce taxable profit

• Clear audit-ready documentation with supporting receipts

• Improved cash-flow forecasting when business expenses are visible month by month

Real savings through proper expense management

Claiming all allowable costs can significantly reduce your tax liability — meaning more retained profit for reinvestment or dividend distribution. For a small business on tight margins, this can make a tangible difference.

We offer bookkeeping packages from £129 per month with two months free on annual subscriptions, including bank reconciliation, VAT, PAYE and monthly reports for complete financial clarity. Need help? Email support@bookkeepingpackages.co.uk or visit our site at www.bookkeepingpackages.co.uk.