+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


Tax Resistance Threatens Reeves' Strategy As Patience Wears Thin

Tax resistance is building as households and firms hit their limits. Reeves' strategy risks faltering without a credible quid pro quo. A reset on spending and growth may be unavoidable ......

Click here to view this blog post


Simple Assessment Payment Plans: Apply Online To Spread Your HMRC Tax Bill

Here's how simple assessment payment plans work and who qualifies. Taxpayers can apply online to spread tax bills, with interest still charged. It's quick, practical, and often penalty-friendly ......

Click here to view this blog post


CPI inflation rise to 3.8%: what it means for the UK

Here are my thoughts on the CPI inflation rise to 3.8% and why it matters to both business and consumers. Prices are heating up before likely cooling off in a few months. Small firms should prep for volatility and policy shif...

Click here to view this blog post


Speculation Over the Autumn Budget 2025: What Might Be Announced?

Here's a quick take on the Autumn Budget 2025. Expect debate over borrowing, tax changes, and what HMRC may tweak, with winners and losers likely. Keep plans flexible while the chancellor weighs government spending needs ......

Click here to view this blog post


Evidence Needed For Every Pension Tax Relief Claim From September 2025

As of 1st of September 2025, every Pension Tax Relief claim now needs evidence and can't be made by phone. Claims must be made online or by post, with self-assessment via the return. Here's what to provide and who can claim, ...

Click here to view this blog post


The Massive Problem With 'Good In Theory' Tax Planning

In today's blog post, I'll discuss why tax planning should be boring. Innovative tax strategies can backfire, and policy tweaks often hinder growth and savings. Practical, predictable rules will always beat flashy headlines ....

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 ......

Other bloggers you may like ...

Click here to view this blog post


Smart Picks For Silverstone Accommodation In Milton Keynes

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

Hunting for silverstone accommodation that's close, comfy, and hassle‑free? Base yourself in Milton Keynes for fast circuit access and buzzing nightli ...

Click here to view this blog post


Do You Feel Stressed? Discover How to Find Your Happy Place Anytime You Need To!

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

When your world is filled with demands and distractions, finding your happy place is essential for managing stress. Explore techniques in this blog po ...

Click here to view this blog post


Mastering Fire Safety In Rental Properties: A Landlord's Smart Guide

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

Here's a clear plan for fire safety in rental properties and the smart admin behind it. You'll see what to check, when to record it, and how a virtual ...

Click here to view this blog post


Learning With My Clients

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

I had a lovely email when I first published this blog post from one of my clients, a graphic designer of many years, but new to running his own busin ...

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