The short version: A non-deductible expense is something you can’t claim against your income to reduce your tax bill. Even if it feels like a business cost, if HMRC doesn’t allow it, you can’t deduct it.
What’s the rule?
Expenses must be incurred “wholly and exclusively” for business purposes. If there’s any personal element, it’s either non-deductible or needs to be apportioned. HMRC is strict about this.
Common non-deductible expenses
Everyday meals and drinks (even when working). Clothing that could be worn outside work. Fines and penalties. The personal portion of phone bills or home costs. Travel from home to your regular workplace. Entertainment for clients (with some exceptions).
What about mixed use items?
If something is partly business and partly personal, you can sometimes claim the business portion. A phone used 50% for work means you can claim 50% of the bill. But you need to be able to justify the split if HMRC asks.
Why does it matter?
Claiming non-deductible expenses can lead to penalties if HMRC investigates. It’s better to be conservative and accurate than to overclaim and face questions later.
Not sure what you can and can’t claim? Ask us and we’ll help you get it right.
