As the 2024–2025 tax year draws to a close, HMRC has introduced significant changes affecting how sole traders report personal expenditure in their Self-Assessment tax returns. These updates are part of a broader campaign to improve compliance and ensure that only legitimate business expenses are claimed.
HMRC is intensifying its scrutiny of personal expenses that are incorrectly claimed as business costs. Following a successful trial in 2024 that recovered over £27 million in revenue, HMRC is now launching a full-scale digital campaign targeting sole traders, partnerships, and landlords.
The key principle remains the same: expenses must be “wholly and exclusively” for business purposes to be deductible. Any personal benefit—even partial—can make the expense disallowable unless a clear business-only portion is identified and documented.
Certain expense categories are more likely to include a personal element. A summary of rules has been provided below, alongside links to detailed guidance from HMRC.
| Type of expenditure | Notes | Guidance |
| Travel and subsistence | The everyday cost of meals is not allowable. Meals and accommodation are allowable for itinerant trades, or where they are incurred as part of travel outside of the individual’s normal pattern of travel | BIM47705 |
| Vehicle expenses | Travel costs between home and a base of operations are not generally deductible. | BIM37600 |
| Use of home | Apportionment is typically based on the proportion of rooms, or the floor area, used for business purposes. | BIM47800 |
| Entertaining | Generally, entertaining is not deductible | BIM45000 |
| Training costs of the proprietor(s) | In general, refresher or CPD courses are deductible, but training that provides new knowledge, skills or qualifications is not deductible | BIM42526 |
What Griffin Will Do
With HMRC tightening its rules around personal expenditure, having a qualified accountant by your side is more valuable than ever. Here’s how they can support you:
- Clarifying What Counts as Business vs. Personal – Our accountants are trained to interpret HMRC’s guidelines and can help you distinguish between allowable business expenses and personal costs. We will ensure you don’t accidentally claim disallowed items, reducing your risk of penalties.
- Apportioning Mixed-Use Expenses – For items like mobile phones, internet, and vehicles, our accountants can help you calculate the correct business-use percentage and guide you in maintaining proper records.
- Preparing Accurate Tax Returns – Our accountants will ensure your Self-Assessment tax return reflects the latest rules, including the new requirement to report trading start and stop dates.
- Offering Strategic Advice – Our accountants can help you with forward planning – suggesting ways to structure your finances, manage cash flow, and optimise your tax position for future years.
For any additional support or information, please feel free to contact office@griffinaccountancy.co.uk
