+44 (0) 1908 774320
   
Roger Eddowes

Essendon Accounts & Tax

Home of the Business Godparent ...

HMRC Targets Personal Expenditure In Business Accounts This Tax Year

Roger Eddowes

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 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 ...

Share this to FacebookBuffer
Share this to FacebookFacebook
Share this to TwitterTwitter
Share this to Linkedin (popup window)Linkedin
Share this to Pinterest (popup window)Pinterest
Share this to WhatsApp (popup window)WhatsApp

#HMRC targets personal expenditure #SelfAssessment #TaxCompliance #SoleTraders #Landlords #BusinessExpenses

About Roger Eddowes ...

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 ...

Click here to view this blog post


Disputed Employer PAYE Charges: Correct Your HMRC Tax Bill

Did you know it's possible to challenge employer PAYE charges, identify payroll mismatches, and correct your HMRC tax bill? My blog post outlines what information to gather and how HMRC will respond to your dispute ......

Click here to view this blog post


What's Changing For Employee Car Ownership Schemes And Company Vehicle Tax?

HMRC is tightening the rules for employee car ownership schemes from October 2026. It also remains crucial to classify vehicles correctly for tax. This blog post explains both changes and what to do next ......

Click here to view this blog post


Final Coins Featuring The Late Queen Enter Circulation As New Carolean Era Begins

The final £1 coins featuring our beloved late Queen enter circulation as new King Charles III designs grow in number. Millions are heading for tills, pockets and collections. It's a tangible moment of change in Britain's ever...

Click here to view this blog post


Employment Rights Bill Roadmap: SSP Changes From April 2026

The Employment Rights Bill roadmap confirms SSP reform from April 2026. If you're an employer, then take a look to see if your policies, budgets and systems align with the new rules. Wider measures will follow through 2026 an...

Click here to view this blog post


How To Avoid Tax Return Errors Due To Mid-Year CGT Changes

Mid-year rate rises have led to tax return errors due to Capital Gains Tax changes. Understand who is affected, what HMRC letters mean, and how to correct returns. Use HMRC's tool and amend your returns promptly to avoid inte...

Click here to view this blog post


UK Millionaires: Why the Nation Faces an Exodus like No Other

Latest reports reveal a troubling trend for UK millionaires, with projections indicating around 16,500 will have left the country by the end of 2025. Driven by tax increases and economic stagnation, this raises concerns about...

Click here to view this blog post


Is Rachel Reeves Making Decisions That Could Tank the Economy?

Navigating the turbulent waters of Britain's financial landscape, Rachel Reeves must confront some hard truths. Failure to make informed decisions could tank the economy and sacrifice the very economic stability and growth we...

Click here to view this blog post


The Implications of Opting Out of Winter Fuel Payments for Wealthier Pensioners

Wealthier pensioners may consider opting out of winter fuel payments due to the implications of tax recovery. This blog post elaborates on the recovery process, eligibility criteria, and how to successfully opt out before the...

Other bloggers you may like ...

Click here to view this blog post


Why Serviced Accommodation in Milton Keynes Beats Hotels for Business Stays

Posted by Emily Freeman on https://blog.shortstay-mk.co.uk

If you want space, flexibility and speed, serviced accommodation in Milton Keynes wins hands down. You get privacy, a kitchen, high‑speed Wi‑Fi, good ...

Click here to view this blog post


How to Create Your Own Career Landscape and Take Back Control

Posted by Dave Cordle on https://blog.davecordle.co.uk

Here's how to create your own career landscape with calm, practical steps. Clarify what works, ditch what doesn't, and act daily. You'll turn uncertai ...

Click here to view this blog post


Landlord Compliance Checklist 2025: Essential Rules You Can't Miss

Posted by Sarah Hannaford on https://blog.sarahpasolutions.co.uk

Here's your landlord compliance checklist for 2025, simplified. Know what to update, when to renew, and how to avoid costly mistakes. Keep it legal, c ...

Click here to view this blog post


So, Why This Business? Why Are You Starting It? And Why Now?

Posted by Jacky Sherman on https://www.jackysherman.com

In June, I published this blog post, which started out asking the question, Why are you in the business you're in? Then it went on to list everything ...

Click here to discover sBlogIt! The done-for-you blogging service