Running a small business in the UK means managing your costs—and your taxes. One of the most effective ways to lower your tax bill is by claiming all allowable expenses and deductions that apply to your business. But what exactly can you deduct? 

At East London Accountants, we help sole traders, limited companies, and small business owners in London and beyond to make the most of their tax returns. Below is a practical guide to the most common tax deductions your small business may be eligible for. 

What Are Tax Deductions? 

A tax deduction (also known as an allowable expense) is a cost you incur wholly and exclusively for running your business. HMRC allows you to subtract these costs from your income, reducing your taxable profit—and therefore your tax liability. 

Top Tax Deductions to Consider 

1. Office and Premises Costs 

• Rent or mortgage interest (proportion if working from home) 
• Utility bills: electricity, gas, water 
• Business rates and council tax (if applicable) 
• Maintenance and repairs 
• Office cleaning and supplies 

2. Staff and Wages 

• Salaries and wages 
• Employer National Insurance contributions 
• Staff pensions (auto-enrolment) 
• Bonuses and commissions 
• Recruitment costs 

3. Travel and Vehicle Expenses 

• Mileage (45p per mile for the first 10,000 miles) 
• Public transport, parking, tolls 
• Vehicle insurance, fuel, servicing (business proportion only) 
• Hotel and meals during overnight business trips 

4. Marketing and Advertising 

• Website development and hosting 
• Social media advertising (Facebook, LinkedIn, Instagram) 
• Google Ads and search engine marketing 
• Business cards, brochures, flyers 
• Event sponsorship or trade shows 

5. Equipment and Tools 

• Computers, phones, printers, and software 
• Furniture and fixtures 
• Tools or specialist equipment used for your trade 
• Repairs and replacements 

6. Professional Services 

• Accountant fees 
• Legal services 
• Consultancy and business support 
• Financial advice 

7. Insurance 

• Public liability insurance 
• Professional indemnity insurance 
• Business interruption or contents insurance 

8. Training and Development 

• Courses related to your business activities 
• Seminars and professional development workshops 
• Subscriptions to trade publications 

9. Bank Fees and Interest 

• Business bank account charges 
• Interest on business loans 
• Credit card processing fees 

10. Home Office Costs (if applicable) 

If you work from home, you can claim a portion of: 

• Rent or mortgage interest 
• Utility bills 
• Internet and phone line 
• Council tax (if not already covered) 

Simplified Expenses vs Actual Costs 

HMRC allows small businesses to choose between: 

• Flat rate (simplified expenses) – Easy to calculate 
• Actual cost method – More precise, potentially larger deductions 

We help our clients compare both and choose the more tax-efficient option. 

What You Can’t Claim 

You cannot deduct: 

• Personal expenses or leisure travel 
• Everyday clothing (unless protective or branded) 
• Client entertainment or gifts (with exceptions) 
• Fines, penalties, or personal loan interest 

Record Keeping Is Essential 

To claim deductions, keep detailed records: 

• Receipts and invoices 
• Bank statements and expense logs 
• Mileage logs and travel receipts 

We recommend using cloud accounting software like QuickBooks or Xero to automate tracking and reporting. 

How East London Accountants Can Help 

We provide full tax planning and return services, including: 

• Identifying all eligible deductions 
• Helping you separate personal vs business costs 
• Filing accurate tax returns 
• Minimising your tax bill legally and efficiently 

With over 20 years of experience supporting small businesses, we know where savings are missed and how to make your business more tax efficient. 

Book a Free Tax Review for Your Business 

Want to make sure you're claiming everything you're entitled to? Get in touch with East London Accountants for a free tax review. We'll examine your records, spot opportunities, and help you reduce your tax bill without cutting corners.