HMRC Targets Personal Expenditure In Business Accounts This Tax Year

CREATED BY ROGER EDDOWES Published: 04/09/2025 @ 09:00AM #HMRC targets personal expenditure #SelfAssessment #TaxCompliance #SoleTraders #Landlords #BusinessExpenses

HMRC will be targeting personal expenditure in business accounts with a new digital campaign and will make more enquiries. It wants clear, consistent apportionment and strong records. You should review your accounts before submitting your tax return if needed ...

HMRC targets, Personal expenditure, Inspection awaits

HMRC ran a successful 2024 trial, which raised over £27m and proved that private costs can creep into business claims. The new digital campaign means more nudges, more checks, and more enquiries for sole traders, partners and landlords who blur the line between personal and business expenditure.

The core rules have not changed!

An expense must be incurred wholly and exclusively for it to be deductible. Where there's a clear business element within a mixed cost, that business portion can still be claimed, provided the apportionment is fair, backed by evidence and applied consistently year on year.

What HMRC wants to see is simple, reliable proof. Mileage logs that reconcile to journeys, phone bills split on a sensible basis, and home office claims that reflect actual business use across the tax year.

When HMRC targets personal expenditure, weak records are the first domino to fall, so contemporaneous notes and receipts matter.

It also pays to remember that routine repairs to premises are generally allowable, but improvements are capital and must be excluded from revenue deductions. For plant and machinery, capital allowances may be ok, but personal use of assets such as vehicles requires a restriction so that only the business element attracts relief.

Don't forget flat rates!

Some taxpayers may prefer the simplified expenses route for vehicles, home working and private use of business premises. The flat rates are designed to be practical, reduce judgment calls, and lower enquiry risk when used consistently and supported by basic records.

I strongly recommend you review your 2024/25 returns with fresh eyes and revisit earlier years if necessary. If a method of apportionment has drifted, or if evidence is light, tightening the approach now is wise, especially as HMRC targets personal expenditure with data-led prompts and follow-up enquiries.

Typical flashpoints include motoring, phones and broadband, use of the home, mixed-purpose travel, and property-related costs. The question is not whether an item has any personal benefit, but whether the business part can be identified, measured and defended. A credible, repeatable method - explained in working papers - goes a long way.

This is not about disallowing genuine business
costs; it is about clarity!

Anyone who shows how a claim was calculated, why the basis is reasonable, and how it has been applied over time will usually be on firm ground. In contrast, round-sum estimates without evidence invite challenge when HMRC targets personal expenditure in routine risk reviews.

The message from HMRC is friendly, but firm: claim what is due, prove it sensibly, and keep the approach steady from one year to the next. That blend of accuracy and evidence is precisely what HMRC's personal expenditure campaign is designed to test.

Well-prepared taxpayers can readily demonstrate all of their claims.

Until next time ...

ROGER EDDOWES
Join our mailing list! Click here and be one of the first to know when we publish a new blog post!

Share the blog love ...

Buffer Facebook Twitter Linkedin Pinterest WhatsApp #HMRC targets personal expenditure #SelfAssessment #TaxCompliance #SoleTraders #Landlords #BusinessExpenses

About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach. Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

More blog posts for you to enjoy ...
		Companies House accounts filing changes: Why 2028 is closer than you think The Companies House accounts filing changes coming into force from April 2028 may sound comfortably distant, but I think businesses would be wise to start understanding them now. The reforms will change both how company accou...
		Practical mental health tips for business leaders Running a business can be rewarding, but it can also put considerable pressure on the person in charge. These mental health tips for business leaders can help owners and managers protect their well-being while continuing to m...
		Could AI finally solve the UK productivity problem? For years, UK productivity has been something of an economic headache. Before the financial crisis in 2008, productivity was growing at a much healthier rate, but progress since then has been disappointingly slow ......
		New King Charles 10p coin enters circulation as Britain uses less cash There is something rather fascinating about the arrival of the new King Charles 10p coin. More than seven million are being released into circulation, meaning they should soon start appearing in our change ......
		Device theft and banking fraud: Why your phone security matters Most of us still think about mobile phone theft in terms of losing an expensive piece of technology. It is inconvenient, frustrating and potentially costly to replace, but I feel the bigger risk today is what that phone gives...
		HMRC's automatic MTD sign-up starts in September HMRC has confirmed an important change for sole traders and landlords who should already be using Making Tax Digital for Income Tax but have not yet registered. From September 2026, HMRC's automatic MTD sign-up will begin ......
		Cybersecurity for businesses: Why falling behind is becoming a bigger risk Cybersecurity has been a business concern for years, but the nature of the threat is changing quickly. Artificial intelligence, increasingly sophisticated cyberattacks, and even developments in quantum computing mean business...
		The cost of doing business is changing how companies operate There has been plenty of discussion about the rising cost of living, but I think we also need to pay closer attention to the rising cost of doing business. Companies are dealing with many of the same inflationary pressures as...

Other bloggers you may like ...
		The silent problem of loneliness in modern Britain Posted by Steffi Lewis on https://www.yourping.uk Loneliness in modern Britain does not always look like isolation. It can look like independence, remote working, online shopping and a perfectly ordin ...
		Moving to Milton Keynes: how Short Stay : MK makes relocation simple Posted by Emily Freeman on https://blog.shortstay-mk.co.uk Moving to Milton Keynes can feel like a lot, especially while you're job-starting and house-hunting at the same time. Short Stay : MK gives you a prac ...
		Physical symptoms of work stress: Is your body trying to tell you something? Posted by Dave Cordle on https://blog.davecordle.co.uk The physical symptoms of work stress can sometimes be easier to dismiss than the emotional ones. You might put a headache down to a long day, blame ac ...
		Because someone should notice if you don't check in Posted by Steffi Lewis on https://www.yourping.uk The phrase "Because someone should notice if you don't check in” is far more than just a tagline. It is the core belief behind everything we do. Our d ...