16th September 2025
HMRC is set to launch a new digital campaign to remind Income Tax Self-Assessment (ITSA) taxpayers not to claim tax relief on personal spending when completing their 2024/25 tax returns.
Following a trial earlier this year which generated more than £27 million in additional tax, HMRC says it plans to open more enquiries to ensure that individuals are only deducting expenses that relate entirely to their business activity. In particular, it is looking closely at mixed-use expenditure. For example, costs that have both business and personal elements, to confirm that appropriate apportionments have been made.
Agents are being encouraged to review expense claims for clients when completing 2024/25 returns, and to make any necessary corrections to historic submissions.
The rules at a glance
For an expense to be deductible, it must be incurred wholly and exclusively for business purposes. Where only part of a cost relates to the business, that element can be claimed, provided it is supported by appropriate records (such as mileage logs) and applied consistently each year.
Capital expenditure is disallowed through the profit and loss account, although capital allowances may be claimed where appropriate. Personal use of assets, for example vehicles must be adjusted for. Repairs are allowable, but improvements are capital in nature and therefore not deductible.
Taxpayers may choose to use HMRC’s simplified flat-rate expenses for motor costs, working from home and use of business premises.
Expense categories to review carefully
Some types of expenditure are more likely to need private use adjustments. HMRC’s guidance emphasises the following areas:
| Type of expenditure | Notes | HMRC Reference |
| Travel & subsistence | Everyday meals are not allowable. Meals/accommodation may be claimed if incurred during business travel outside normal patterns. | BIM47705 |
| Vehicle expenses | Travel between home and a regular base of operations is generally disallowed. | BIM37600 |
| Use of home | Claims should be apportioned based on space/time used for business. | BIM47800 |
| Entertaining | Generally disallowed. | BIM45000 |
| Training | Refresher and CPD courses are usually allowable. Training that creates new skills/qualifications is disallowed. | BIM42526 |
With increased HMRC activity anticipated, now is a sensible time for sole traders, partnerships and landlords to review their expense policies and record-keeping procedures. If you would like support in ensuring your claims are compliant and robust ahead of the 2024/25 filing season, please do not hesitate to get in touch with our team.
As part of this, you may also want to consider protecting yourself against the professional costs of an HMRC enquiry. With HMRC recruiting additional compliance staff, the likelihood of checks being opened is rising. Our enquiry fee protection service covers our fees in the event that you are selected for a review, giving you peace of mind that any investigation can be dealt with swiftly and thoroughly. The average claim in the last twelve months was £644 (equivalent to £773 inclusive of VAT if billed directly to an individual). Renewals are issued each Autumn, but if you do not currently have this cover and would like more details, please contact Andrea Sear (ASear@tjllp.com).
