7 Tax Reliefs Small Business Owners Often Miss
Tax relief UK | Business expenses UK | Small business tax savings
Running a small business means keeping an eye on sales, cash flow, costs, customers, staff and approximately 47 other things before breakfast.
So it’s hardly surprising that tax reliefs don’t always make it to the top of the list.
But here’s the thing: you could be paying more tax than you need to simply because you’re not claiming everything your business is entitled to.
And no, we’re not talking about dodgy tax schemes or creative accounting.
We’re talking about legitimate UK tax reliefs and allowable business expenses that many small business owners either overlook, misunderstand or simply don’t know exist.
From working from home and business mileage to pension contributions and equipment, there are plenty of perfectly legitimate ways to reduce your taxable profits.
So, let’s look at 7 tax reliefs small business owners often miss.
Important: Tax rules depend on your business structure and individual circumstances. The examples below are based on current UK rules for 2026/27. Always check with your accountant before making a claim.
1. Working from home
If your business operates from the kitchen table, spare bedroom, garden office or whatever corner of the house hasn’t been taken over by someone else, you may be able to claim for some of the costs of working from home.
For sole traders, this can include a proportion of costs such as:
- Electricity
- Gas
- Council Tax
- Rent
- Mortgage interest
- Internet and telephone costs
The important bit is that you can only claim the business proportion of the cost.
There are also simplified expenses available to eligible sole traders and partnerships, meaning you can use a flat-rate calculation rather than working out the exact business proportion of your household bills.
For example, if you work from home for at least 25 hours a month, the current simplified rates are:
| Hours worked from home per month | Flat-rate expense |
|---|---|
| 25–50 hours | £10 per month |
| 51–100 hours | £18 per month |
| 101+ hours | £26 per month |
You can also claim the business proportion of telephone and internet costs separately where appropriate.
The catch?
Don’t automatically assume the flat rate is the best option.
If your actual allowable household costs are significantly higher, calculating the actual business proportion could produce a larger deduction.
Honest advice: Don’t just pick the easiest option. Work out which method actually benefits your business.
Note: These simplified home-working rules apply to sole traders and eligible partnerships, not limited companies. Company directors and employees have different rules.
2. Business mileage
If you’re driving to clients, suppliers, temporary workplaces, networking events or other places for business, don’t forget the miles.
For 2026/27, the approved mileage rate for cars and vans is:
55p per mile for the first 10,000 business miles
and
25p per mile after 10,000 miles.
Motorcycles are 24p per mile and bicycles are 20p per mile.
That means someone covering 5,000 qualifying business miles in their own car could potentially claim:
5,000 × 55p = £2,750
That’s a sizeable deduction.
And it’s particularly relevant for contractors, consultants, tradespeople, engineers, salespeople and anyone whose business involves getting from A to B.
You need proper mileage records, including the details of your business journeys.
And remember: commuting from home to your normal permanent workplace isn’t generally business mileage.
The rules depend on your circumstances, so don’t just chuck every journey into the spreadsheet and call it a business expense.
We’ve covered the 2026 mileage increase in more detail in our guide:
HMRC Mileage Rate 2026: 55p Per Mile – And You Can Backdate It to April
3. Pension contributions
This is one that can be particularly interesting for limited company owners.
If your limited company makes an employer pension contribution for you, that contribution may be an allowable business expense, reducing the company’s taxable profits, provided the relevant conditions are met.
In general, employer contributions to a registered pension scheme can be deductible where they are incurred wholly and exclusively for the purposes of the business.
So instead of simply thinking:
“I’ve made money, I’ll take it out of the company.”
It’s worth considering whether some of that money could be used as an employer pension contribution instead.
There are limits and rules around pension contributions, including the annual allowance, so this isn’t a case of simply putting an unlimited amount into a pension and avoiding tax.
For 2026/27, the standard pension annual allowance is £60,000, although individual circumstances can affect the amount available.
Honest advice: If you’re a profitable limited company owner and you’re not talking to your accountant about pension contributions, it’s worth having the conversation.
It could be good for your future and your current tax position.
4. Equipment and capital allowances
Bought a new laptop? Van? Machinery? Tools? Office equipment? Something else your business genuinely needs to operate?
Don’t automatically assume it’s just another business expense.
Some purchases fall under capital allowances, which allow businesses to claim tax relief on qualifying capital expenditure.
The big one to know about is the Annual Investment Allowance (AIA).
The AIA is currently £1 million and allows businesses to deduct the full cost of most qualifying plant and machinery from taxable profits, subject to the rules.
There are also other capital allowance regimes, including full expensing for qualifying companies and a new 40% first-year allowance for certain qualifying main-rate plant and machinery purchased from 1 January 2026.
This matters because investing in your business can have a tax consequence.
For example, if you’re planning a significant equipment purchase, the timing of that purchase can affect when you receive the tax relief.
Don’t buy something purely because there’s tax relief available.
But if you genuinely need the equipment anyway, understanding the tax treatment before you buy it could make a difference.
5. Professional subscriptions and memberships
This is one of those expenses that can disappear into the background.
Professional memberships.
Industry bodies.
Trade organisations.
Certain subscriptions.
If a membership or subscription is relevant to your business and meets HMRC’s requirements, it may be an allowable expense.
For employees, HMRC specifically allows relief for certain professional membership fees and annual subscriptions to approved professional bodies where the relevant conditions are met.
For business owners, the wider principle is the same:
If it’s genuinely for the business, don’t assume it can’t be claimed.
This can be particularly relevant for:
- Engineers
- Consultants
- IT professionals
- Tradespeople
- Coaches and trainers
- Creative professionals
- Industry specialists
- Regulated professions
The key is that the cost must genuinely relate to the business rather than simply being something you happen to enjoy or find useful personally.
So before you write off that annual industry membership as “just one of those costs”, ask your accountant.
You might be leaving a legitimate deduction sitting in your inbox.
6. Trivial benefits
This one is more relevant to limited companies with employees — including owner-managed businesses.
A trivial benefit can be provided to an employee without being subject to tax or National Insurance if it meets HMRC’s conditions.
The benefit must:
- Cost £50 or less
- Not be cash or a cash voucher
- Not be a reward for work or performance
- Not be part of the employee’s contractual terms
And there are specific rules for directors of close companies.
For directors and office holders of close companies, qualifying trivial benefits are capped at £300 in total per tax year.
So, for example, an occasional £50-or-less non-cash treat that meets the conditions can potentially fall within the exemption.
It’s not about finding increasingly inventive ways to spend £50.
It’s about knowing that there are legitimate employee benefits available that can be tax efficient when used correctly.
And if you have a small team, it’s worth understanding the rules rather than assuming every little perk creates another tax headache.
7. Costs incurred before your business started
Here’s one that’s particularly easy to miss.
Your business doesn’t necessarily need to have officially started trading on the day you bought something for it.
Certain pre-trading expenses can potentially qualify for tax relief when you start trading, provided the relevant conditions are met.
Think about the costs you incurred while getting everything ready:
- Professional advice
- Certain equipment
- Advertising and marketing
- Business premises costs
- Relevant subscriptions
- Other genuine business set-up costs
The rules depend on what you bought, when you bought it and your business structure.
For example, HMRC’s rules can allow certain pre-trading expenditure to be treated as incurred when the trade starts, subject to specific conditions.
So if you’ve spent money getting your business off the ground, don’t throw those receipts away just because you hadn’t made your first sale yet.
Keep them.
Give them to your accountant.
Let them work out what’s allowable.
What counts as a business expense?
This is where things can get confusing.
The basic principle is relatively straightforward:
If you’re self-employed, you can generally deduct allowable business costs when calculating your taxable profit.
So, for example:
£40,000 turnover
minus
£10,000 allowable expenses
equals
£30,000 taxable profit.
You’re taxed on the profit, not simply the money coming into the business.
But there’s an important distinction.
Buying something because you like it isn’t the same as buying something because your business needs it.
If something has both business and personal use, generally only the business proportion can be claimed.
That’s why keeping proper records matters.
Receipts. Invoices. Mileage. Subscriptions. Equipment purchases. The boring stuff.
Because boring records can save you money.
Sole trader or limited company? The rules aren’t always the same
This is another reason not to rely on a random tax-saving list you found online.
The tax treatment of an expense can depend on whether you’re:
- A sole trader
- A partnership
- A limited company
- A company director
- An employer
- VAT registered
For example, simplified expenses for working from home are available to sole traders and certain partnerships, but not limited companies.
Likewise, pension contributions, employee benefits and capital expenditure can have different implications depending on your business structure.
There isn’t one giant “small business expense” rulebook that works for everyone.
That’s where good accounting advice earns its keep.
The biggest tax saving might be the expense you haven’t claimed
Small business owners are often very good at finding ways to increase revenue.
They’re less good at remembering every legitimate cost of running the business.
And that’s understandable.
You’re busy. You’re selling. You’re delivering. You’re managing people. You’re chasing invoices. You’re trying to grow.
Tax comes around once a year and suddenly you’re expected to remember what you spent 10 months ago.
That’s why good bookkeeping matters.
And it’s why having an accountant who understands your business — rather than simply filing your accounts once a year — can make a difference.
Your small business tax relief checklist
Before your next tax return, ask yourself:
✓ Do I work from home?
✓ Have I recorded all my business mileage?
✓ Have I bought equipment or machinery?
✓ Does my company make pension contributions?
✓ Am I paying professional memberships or subscriptions?
✓ Do I have employees who could benefit from legitimate tax-efficient benefits?
✓ Did I spend money getting the business started before I officially began trading?
If you’ve answered “yes” to any of those, it’s worth checking whether there’s a tax relief or allowable expense you’re missing.
Don’t pay more tax than you need to
Let’s be clear.
Tax avoidance isn’t the goal.
And neither is buying things you don’t need just because they’re tax deductible.
The goal is much simpler:
Make sure you’re claiming every legitimate tax relief and business expense you’re entitled to.
That’s just good business.
At Honest Accounting, we don’t believe accounting should be complicated, confusing or full of jargon.
We believe you should understand your numbers, know what you’re paying and have an accountant who actually talks to you.
Because small business tax savings aren’t about clever tricks.
They’re about getting the basics right — and not leaving money on the table.
Want to know what you could be saving?
If you’re wondering whether you’re claiming everything you should be, talk to Honest Accounting.
We’ll give you straightforward advice, without the waffle.
Contact one of the team today on: 0333 138 0003
Honest Accounting. Simple. Efficient. Always Compliant.