HMRC is set to launch a digital campaign aimed at informing Income Tax Self Assessment (ITSA) taxpayers that personal expenditure is not eligible for tax relief on 2024/25 tax returns. This initiative follows a 2024 pilot, which generated over £27 million in additional tax revenue and identified instances where private, non-allowable costs were incorrectly reported as business expenses. In documentation shared with ICAEW, HMRC outlined that the campaign will be supported by an increase in compliance activity. Specifically, HMRC will undertake more enquiries to ensure that sole traders, partners, and landlords are claiming deductions strictly for business-related expenditure. Particular attention will be given to mixed-use costs, which must be appropriately apportioned between personal and business use in accordance with established guidelines.
Here are some areas often causing uncertainty
| Type of expenditure | Notes | Guidance |
| Travel and subsistence | The everyday cost of meals is not allowable. Meals and accommodation are allowable for itinerant trades, or where they are incurred as part of travel outside of the individual’s normal pattern of travel | BIM47705 |
| Vehicle expenses | Travel costs between home and a base of operations are not generally deductible. | BIM37600 |
| Use of home | Apportionment is typically based on the proportion of rooms, or the floor area, used for business purposes. | BIM47800 |
| Entertaining | Generally, entertaining is not deductible | BIM45000 |
| Training costs of the proprietor(s) | In general, refresher or CPD courses are deductible, but training that provides new knowledge, skills or qualifications is not deductible | BIM42526 |
