Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer An allowable expense is a cost incurred wholly and exclusively for your business. It reduces your taxable profit, and therefore your tax. Costs with a private element must be split, and some costs, such as entertaining and fines, are never allowable however business related.

The wholly and exclusively test

The test sounds strict but is practical. If a cost is genuinely for the business, it is allowable. If it has a private purpose too, you claim only the business share. A phone used for both work and personal calls, for example, is split by usage.

What is usually allowable

  1. Direct costs. Stock, materials and subcontractors.
  2. Running costs. Rent, utilities, insurance, software and phone.
  3. Travel. Business journeys, but not ordinary commuting.
  4. Professional costs. Accountancy, legal fees on business matters, and relevant subscriptions.
  5. Equipment. Usually through capital allowances rather than as a simple expense.

What is not allowable

  • Client entertaining and most private costs.
  • Fines and penalties.
  • The private share of any mixed cost.

Confident you are claiming correctly?

The line between allowable and not is where tax is won or lost. TaxTune claims everything you are entitled to, splits mixed costs correctly, and keeps it all defensible.

See how we can helpAsk about expenses

Let us get your expenses right

We review your costs, claim every allowable expense and capital allowance, and file a return that is both optimised and correct. Fixed fee.

Get a fixed fee quoteTalk to a real accountant

Keep reading

Frequently asked questions

What are allowable expenses?

Costs incurred wholly and exclusively for your business. They reduce your taxable profit and therefore your tax. Costs with a private element must be apportioned.

What does wholly and exclusively mean?

It means the cost must be for business purposes. If a cost has both business and private use, you can claim only the business proportion of it.

Can I claim mixed use costs?

Yes, but only the business share. A phone or car used for both work and personal purposes is split by usage, and only the business part is allowable.

What is never allowable?

Client entertaining, fines and penalties, and the private element of any mixed cost are not allowable, however closely they relate to the business.

Do expenses reduce my tax directly?

They reduce your taxable profit, so you pay tax on a smaller figure. Claiming everything you are entitled to is one of the simplest ways to lower your bill legitimately.