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GovMath.

Business · 2025/26

Allowable Expenses Calculator

Every pound of allowable expense knocks ~28p off your tax bill (basic rate + Class 4 NI). We add HMRC’s simplified flat rates for home working and mileage to your itemised categories.

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Total allowable expenses

£3,666

≈ £1026 saved (basic rate + Class 4 NI).

Breakdown

  • Itemised categories
    £2,100
  • WFH simplified rate
    £216
  • Mileage at HMRC rates
    £1,350
  • Total deductible
    £3,666
  • ≈ Tax + NI saved (28%)
    Higher rate taxpayers save closer to 42%
    £1,026

How we calculated your result

We total the categories you enter, then add the simplified WFH rate (£10/£18/£26 per month depending on hours) and the mileage rate (45p/mi for the first 10,000 business miles, 25p thereafter).

Official UK rules in simple English

  • Expense must be ”wholly and exclusively” for the business — no dual-purpose grey areas.
  • Simplified expenses are optional; you can itemise actual costs instead if higher.
  • Keep receipts for 5 years after the 31 January Self Assessment deadline.
  • VAT-registered businesses claim net of recoverable VAT.

Common pitfalls to watch out for

  • ⚠ Clothing

    Only protective gear or branded uniforms are allowable — a smart suit for client meetings is not.

  • ⚠ Entertainment

    Client entertainment is NOT allowable. Staff entertainment is — up to £150/head/year.

  • ⚠ Home office capital gains

    Claiming a fixed room as exclusively business can trigger CGT on that proportion when you sell. Use the simplified rate or keep dual-purpose use.

Frequently asked questions

Which is better — flat rate or actual costs?
Actual costs win for high-cost home offices (heating, broadband, electricity) but require careful apportionment. Flat rate is risk-free and quick.
Can I claim my mortgage interest?
Only the business-use portion — and only on a buy-to-let / commercial property. On a residential home, use the WFH flat rate or actual utilities only.
What about Class 4 NI savings?
Class 4 NI is 6% on profits £12,570–£50,270 and 2% above. Each £1 expense saves 20% income tax + 6–8% NI = ~26–28%.

Estimates only — HMRC sets the final allowable amount. Get a chartered accountant’s view if your trade has unusual costs.

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