Money Made Simple

Business expense impact calculator

Claiming an expense doesn't make it free — it reduces the profit you pay tax on. This shows the tax you save, what the purchase really costs you, and what it does to your take-home.

Your situation

A laptop, a course, an annual subscription — anything wholly for the business.

Real cost after tax relief

£740

Sticker price £1,000

Tax & NI saved

£260

Relief rate

26.0%

Your marginal saving

Spending £1,000 reduces your take-home by £740, because £260 of it is effectively funded by the tax you no longer owe. Only buy things the business actually needs — a 26% discount is still a 74% cost.

Getting expenses right without overclaiming

HMRC's test is that a cost must be incurred wholly and exclusively for your trade. Mixed items — a phone, a car, broadband — can be apportioned to the business share, but the split has to be reasonable and documented. Overclaiming is far more expensive than the tax it saves once penalties and interest are added.

Commonly missed allowable costs

  • Professional indemnity and public liability insurance
  • Accountancy and bookkeeping fees
  • Trade body subscriptions and professional memberships
  • Software, hosting, domains and stock imagery
  • Use-of-home costs, either flat rate or apportioned

Timing matters at year end

A purchase made just before 5 April lands in this tax year; a day later it lands in the next. If a cost is genuinely needed, timing it deliberately can smooth your bill — but never invent spending to chase relief. Model the effect on your overall take-home first.

Frequently asked questions

Keep planning

These tools give a general illustration only. They are not personalised financial advice and are not FCA-regulated — always check current rates and rules before making a decision.