The principle is that you must incur expenses Wholly & Exclusively (W & E) for the purpose of trade. You can claim following expenses:

Pre-Trading Expenditure

You can claim expenses incurred in the 7 years before commencement of trade provided they are allowed under normal rules.

Business use of home

If you use home for business, you have two options either you can claim flat rate or business proportion of actual household cost on the base of business usage of your home. 

Staff Entertaining

Staff entertaining expenses like staff function and other incidental cost like venue hire, transport & overnight accommodation are allowable.

Business Gift

You can claim where Business gifts bear the business name, logo or a clear advertisement  (e.g. a free sample except food, drink, tobacco) and total cost of all gifts to the same person is less than £50 per year, and Business gifts to charities.

Accommodation

You can claim costs of overnight accommodation on short business trips, and for longer periods for itinerant worker.

Travel Expenses

• You cannot claim home to work travel as it’s ordinary commuting to permanent workplace.
• However, you can claim for travel from home to a temporary workplace (less than 2 years).

Motor expenses

You can claim either flat rate expense for business mileage or business proportion of actual cost of running cost of vehicle like fuel, insurance, maintenance and capital allowance. 

Leasing Costs

You may have two different leases: 

1. Operating lease – You can claim where you simply pay a rental payment to the owner of the asset and deducts the lease payments  or
2. Finance lease – You can deduct depreciation and interest payments.

3. For high emission cars with CO2 emissions more than 50g/km, you can deduct only 85% of the cost. However, you can claim full maintenance costs regardless of the CO2 emissions of the car.

Repairs or Capital Improvement?

You can deduct Cost of repairs against profit whereas you can deduct cost of improvement only on sale of the assets.

Websites, Domain Names and Other Internet Costs are allowable.

Capital Allowances

You can claim capital allowances on qualifying expenditure on plant and machinery like computers and office equipment, Office furniture & Cars and other vehicles.

You can claim capital allowance 100% as an Annual Investment Allowance (AIA) up to £1m and 18% on general pool or 6% on special pool as a Writing Down Allowance (WDA):

• You cannot claim Annual Investment Allowance on cars or private use of assets.
• You can claim 100% of Enhanced capital allowances (ECA) (energy saving and environmentally beneficial plant and machinery). 
• You can claim First Year Allowance (FYA) 100% for electric cars and CO2 zero emission car.
• You can claim Writing Down Allowance at 18% on cars with CO2 emissions not more than 50g/km. 
• You can claim Writing Down Allowance only at 6% cars with CO2 emissions great than 50g/km.
• You can claim at 3% for Structures and Buildings Allowance for qualifying expenditure on a straight line basis with no balancing adjustments on disposal.

Accountancy fees

Allowed:

• You can claim normal accountancy fees for Preparing accounts, Submitting tax computations and supporting accounts to HMRC, Agreement of taxation liabilities with HMRC.

Disallowed: However, you cannot claim Fees which incurred not wholly or exclusively for the purposes of the business, for example:

• Fees for Preparation of a personal tax return or tax computations for an individual or partner in a partnership.
• Fees for Preparation of capital gains tax computations.
• Fees in connection with the acquisition or disposal of a capital asset would be allowed as a deduction for capital gains tax but not as a deduction from business income.

Accounts investigations: additional accountancy expenses

Allowed: 

• When investigation results in no adjustment to profits
• When there is an adjustment to profits for the year of enquiry and the adjustment does not arise as a result of negligent or fraudulent conduct or careless behaviour.

Disallowed:

• When the investigation reveals discrepancies and additional liabilities for the year of enquiry or any earlier year which arise as a result of negligent or fraudulent conduct or careless behaviour.

Legal costs in connection with an appeal 

• Disallowed, even if the appeal is successful.

Termination Payments

On cessation of trade,  Employment law may specifically requires the employer to make redundancy payments. Thus you can claim deduction for statutory redundancy payments made to members of staff on cessation of the trade up to 4 × the statutory amount.

Clothing and work wear

You can claim cost of Protective clothing, Specialist clothing like performers’ costumes, uniforms, barristers wig/gown (not dark clothing appearances for court/orchestra pit).

Fines and Penalties

Fines and penalties are generally disallowable

Thefts and Defalcations

 Allowed as a trading income deduction provided such thefts etc are by employees (ie not proprietors or directors). 

Donations to charities

 Allowed for a sole trader if wholly and exclusively for the purposes of the trade unless a Gift Aid declaration has been made. 

Sponsorship

You can claim cost of Sponsorship which is incurred wholly and exclusively for the purposes of the business.

Subsistence

You can claim subsistence expenses (food and drink or cost of accommodation and incidental overnight expenses) only where business travel is allowable and incurred during the travel:

• Expense incurred on an “itinerant” trade, or
• Only travels to the destination occasionally and the journey is outside a normal pattern. 

Training and course fees

You cannot claim Business training cost to learn a new skill or qualification as it’s capital expenses ie enduring benefit to the business whereas you can claim cost to maintain work-related training and professional development.

However, you can always claim Staff training costs regardless to acquire new expertise or simply to keep up to date.