If you’re a sole trader, it’s time to take a closer look at your expense claims. HMRC has launched a new digital campaign targeting incorrect deductions—and they’re not messing around.

In a recent trial campaign, HMRC recovered £27 million by identifying wrongly claimed personal expenses. That success has prompted a wider rollout, with more enquiries and stricter checks expected for the 2024/25 tax year. The ICAEW reported on it here.

To be allowable, an expense must be:

• Wholly and exclusively for business purposes
• Not capital in nature (e.g. buying a new laptop is capital, repairs are not. But you can claim capital allowances)
• Supported by records like receipts, mileage logs, or bank statements

Mixed-use items—like mobile phones, cars, or home broadband—must be apportioned correctly. HMRC expects consistency year-on-year and clear documentation and would likely ask about this in an inspection.

Common Mistakes HMRC Is Targeting

• Claiming full costs for items with personal use e.g use of home
• Using vague descriptions like “miscellaneous” or “admin” without backup
• Failing to adjust for private use of vehicles, premises, or subscriptions. If you use a vehicle for personal use you cannot claim 100% business use of it. This will be a big one for them!
• Claiming meals or travel that don’t meet the “itinerant trade” test. Your daily lunch as a self employed person isn’t claimable and neither is travelling to a regular place of work
• Claiming for training that isn’t allowable. Refresher or CPD courses are generally allowable but learning something new is not

What You Should Do Now

Review your expense categories before submitting your tax return and maybe check what you have put in that 24/25 tax return

• Keep business and personal accounts separate
• Use flat-rate simplified expenses where appropriate (e.g. mileage, home office)
• Speak to your accountant if you’re unsure—don’t guess!

As personal tax specialists we can help you with this. You can book a discovery call with us here.