Business Expenses Guide for Sole Traders and Limited Company Directors in 2026 (Part 4)
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Throughout this guide, we have covered some of the most common questions we receive from business owners: company cars, mileage claims, home offices, meals and entertainment, and whether personal costs can be paid through a company.
There is one more area that creates a surprising amount of confusion.
Clothing.
It sounds simple. You wear clothes for work, so surely they must be a business expense?
Unfortunately, tax rules are rarely that straightforward.
The key question HMRC asks is not “Do you wear this for work?”
The question is: “Would you have bought this item even if you were not working?”
That distinction makes all the difference.
The short answer is: sometimes.
Certain types of clothing can be claimed as a business expense, particularly where the clothing is specifically required for your work.
However, ordinary everyday clothing is usually not allowable, even if you only wear it when meeting clients or attending business events.
The easiest clothing expenses to justify are items that are clearly connected to your trade or profession.
Examples include:
For example, a construction company purchasing branded polo shirts and protective footwear for its employees would generally have a clear business purpose.
Likewise, an engineer requiring protective equipment when visiting industrial sites would normally be able to claim those costs.
The reason is simple: these items are not really personal clothing. They exist because of the work being carried out.
This is where many directors are surprised.
A business suit may feel like a work expense, particularly if you wear it only for:
However, HMRC generally considers suits and other everyday clothing to have a dual purpose.
In other words, you could wear the suit outside work.
Therefore, a standard business suit, shirt, shoes or formal outfit is usually not an allowable business expense.
This applies even if you personally believe you would never wear it socially.
The tax rules focus on the nature of the item, not your personal habits.
Branded clothing is treated differently.
If a company provides employees with clothing that clearly identifies the business, it is usually much easier to justify.
Examples include:
A local example would be a plumbing company in Kent providing engineers with branded workwear. The clothing promotes the business, identifies employees and supports the trade.
That is very different from a director buying an expensive jacket for meetings and adding the company logo afterwards.
The commercial purpose matters.
For many industries, specialist clothing is an essential business cost.
Examples include:
These expenses are generally easier to support because there is a clear connection between the item and the work being performed.
A useful way to think about clothing claims is this:
Usually allowable:
✅ Safety clothing
✅ Uniforms
✅ Protective equipment
✅ Clothing required by a specific trade
✅ Branded company clothing
Usually not allowable:
❌ Business suits
❌ Shirts and ties
❌ Smart shoes
❌ Watches
❌ Everyday coats and jackets
A good rule of thumb is:
If you would wear it outside work, HMRC is likely to view it as personal clothing.
After working with hundreds of businesses across Tunbridge Wells, Kent and the South East of England, we have noticed that many clients ask very similar questions about expenses.
Here are some of the most common ones.
Ideally, you should always keep receipts.
They provide evidence that:
However, losing an occasional receipt does not automatically mean the expense cannot be claimed.
You should keep alternative evidence where possible, such as:
The more organised your records are, the easier it is to support your claims.
Modern cloud accounting systems have made this much simpler. Many clients now photograph receipts immediately using their mobile phone, meaning paperwork no longer builds up in drawers or folders.
This depends entirely on the circumstances.
If your spouse works in the business and incurs genuine business costs, those expenses may potentially be allowable.
For example:
However, simply paying personal expenses for your spouse through your company is not allowed.
The same principle always applies:
The expense must relate to the business.
Yes, sometimes.
Many new business owners spend money before officially incorporating their limited company.
These are known as pre-trading expenses.
Examples might include:
There are rules around how far back these expenses can be claimed and how they should be recorded.
If you are starting a new business, it is worth keeping every invoice from day one.
A receipt that seems insignificant at the beginning could become valuable later.
For most limited companies, records should generally be kept for at least six years after the end of the accounting period.
This includes:
Digital records are perfectly acceptable, and for most businesses they are now the easiest solution.
An HMRC enquiry does not automatically mean something is wrong.
Sometimes HMRC simply wants clarification.
The best protection is good preparation:
ask questions before making large purchases
A good accountant does not just prepare accounts after the year has finished. They help you make better decisions throughout the year.
Running a business involves hundreds of decisions every year.
Some are big decisions:
Others seem small:
But small decisions add up.
The difference between claiming correctly and missing legitimate expenses can have a meaningful impact on your tax position.
At Peter Hodgson & Co, we help directors understand:
We work with owner-managed businesses, contractors and professional firms throughout Tunbridge Wells, Kent and the wider South East of England.
Our aim is not simply to complete your accounts.
It is to help you make informed financial decisions throughout the year.
The most effective tax planning happens before the year ends.
Waiting until your accounts are prepared is often too late.
We regularly advise clients on areas such as:
profit extraction
A proactive approach gives you more options.
Good systems make good decisions easier.
We help businesses implement modern accounting solutions that allow them to:
Whether you are a contractor working independently, a growing limited company or an established SME, having accurate financial information gives you greater control.
Business expenses do not need to be complicated.
The rules are detailed, but the principle is straightforward:
Claim what is genuinely for your business. Keep good records. Ask questions before making significant decisions.
If you are unsure whether your current approach is tax-efficient, our team at Peter Hodgson & Co can review your accounts and identify potential opportunities.
We support businesses across Tunbridge Wells, Kent, the South East and throughout the UK, providing practical accounting, tax and business advisory support.
Understanding business expenses is one of the simplest ways to improve your financial position as a business owner.
Not because you should spend money just to reduce tax.
That is rarely a good strategy.
Instead, the goal is to ensure that genuine business costs are treated correctly and that you are not paying more tax than necessary.
A laptop that helps you work more efficiently. A company car chosen carefully. Mileage recorded properly. A home office arranged correctly.
These decisions may seem small individually. Together, they can make a significant difference.
At Peter Hodgson & Co, we believe good accountancy is not just about reporting what happened last year. It is about helping you make better decisions for the future.
If you are a sole trader, contractor or limited company director looking for proactive accountants in Tunbridge Wells, Kent or the South East of England, we would be happy to discuss how we can support your business.
Disclaimer:
The content of this blog is for general informational purposes only and should not be considered professional tax advice. The information is correct at the time of publishing but may change following future UK budget announcements or updates to HMRC guidance. Individual circumstances vary, and tax obligations can differ based on your personal situation. We strongly recommend consulting with us or a qualified tax professional to receive advice tailored to your specific needs.
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