BUSINESS owners, sole traders and landlords are being urged to take extra care when filing their next tax return – as HMRC prepares to launch a digital campaign targeting personal expenditure claims.
Accountants at JF Hornby & Co have warned the move is part of a wider crackdown on incorrect expense deductions – and could lead to a surge in investigations and penalties.
HMRC will run a campaign to ensure taxpayers do not claim relief for personal spending on their 2025/26 self-assessment returns.
It builds on a trial run in 2024, which generated more than £27 million in tax revenue and flagged widespread issues with disallowable private use being reported as business expenditure.
HMRC has said it will open more enquiries to check that expenses are correctly apportioned between business and personal use – particularly for sole traders, partners and landlords.
The legislation is clear: expenses must be “incurred wholly and exclusively for the purposes of the trade” to be deductible.
Managing Director Paul Hornby said: “This is a wake-up call for anyone who files a self-assessment return. HMRC is watching closely, and they’re not afraid to act.
“We’re urging clients to keep clear, consistent records and to be honest about what’s business and what’s personal. The days of casually claiming mixed-use expenses without proper evidence are over.”
JF Hornby & Co is advising taxpayers to use mileage logs, consistent apportionment methods, and consider HMRC’s flat rate ‘simplified expenses’ where appropriate.
The firm is also reminding clients that capital expenditure is not deductible – though capital allowances may apply for qualifying items.
Paul said: “I suspect this warning may cause alarm among some business owners who find the rules complicated and difficult to decipher.
“The system is not as simple as HMRC might make out – and getting it wrong can be costly. If you’re unsure about what you can and can’t claim, get in touch. We’re here to help you get it right.”
Contact the JF Hornby team on 01229 588 077 or on jfh@jfhornby.com
