Can I Claim Accounting Fees as a Business Expense

At Towerstone Accountants we provide specialist personal tax services, for self employed, and individuals across the UK. This article has been written to explain Can I claim accounting fees as a business expense, in clear practical terms, so you understand how personal tax and Self Assessment rules apply in real situations. Our aim is to help you stay compliant, avoid costly mistakes, and make confident tax decisions.

Accounting fees are one of those costs that almost every UK business incurs at some point, yet they are also one of the most misunderstood when it comes to tax. I am regularly asked whether accounting fees are deductible, how much can be claimed, and whether HMRC will ever challenge them. In my experience this confusion usually comes from the fact that accounting work often sits across both business and personal tax matters, which makes the rules feel grey even though they are actually quite clear once explained properly.

In this article I want to walk through the topic in depth. I will explain how HMRC views accounting fees, when they are allowable, when they are not, and how the position differs depending on whether you are a sole trader, a limited company director, a landlord, or someone filing a personal tax return. I will also cover common mistakes I see every year, how to record accounting fees correctly, and what to do if your accountant handles both business and personal work for you. Everything here is grounded in current UK tax rules and what I see in real life when dealing with HMRC.

By the end you should have a clear and practical understanding of what you can claim, what you should avoid, and how to stay compliant without overthinking it.

How HMRC decides whether an expense is allowable

Before focusing on accounting fees specifically it is important to understand the general rule HMRC applies to all business expenses.

For an expense to be deductible it must be incurred wholly and exclusively for the purposes of the trade. That phrase appears repeatedly in HMRC guidance and legislation, and it underpins almost every decision on whether a cost can be claimed.

In simple terms HMRC is asking whether the expense was necessary for running the business and whether it was incurred only for that purpose. If an expense has a dual purpose, meaning it benefits both the business and the individual personally, then it is not fully allowable. In some cases it can be apportioned, but in others it is disallowed altogether.

Accounting fees fall neatly into this framework. Some accounting work is purely business related and therefore clearly allowable. Other work blends business compliance with personal tax matters, which is where careful treatment is needed.

The straightforward answer on accounting fees

In most cases yes, accounting fees can be claimed as a business expense.

However not all accounting fees are automatically deductible. What matters is what the fee relates to, who benefits from the work, and who is legally responsible for the cost.

As a broad rule of thumb:

• Fees for preparing business accounts are allowable

• Fees for business tax returns are allowable

• Fees for bookkeeping, VAT, and payroll are allowable

• Fees for dealing with HMRC on business matters are allowable

• Fees for personal tax advice are not allowable

• Fees for private or non business matters are not allowable

Most of the complexity sits in situations where a single fee covers both business and personal work, which is very common in practice.

Claiming accounting fees as a sole trader

If you are a sole trader you and the business are legally the same person. This makes some aspects of tax simpler but it can blur the line between business and personal costs.

HMRC allows sole traders to deduct accounting fees that relate directly to running the trade and calculating taxable profits. These typically include:

• Preparing annual business accounts

• Completing the self employment pages of the Self Assessment return

• Bookkeeping and record keeping support

• VAT returns if you are VAT registered

• Payroll services if you employ staff

• CIS returns and verification if relevant

• General tax advice relating to the trade

These costs are incurred to meet your legal obligations as a business and to calculate profits accurately, so they are normally allowable.

Where confusion arises is around the Self Assessment tax return itself. A sole trader’s tax return often includes far more than just business income. It may also include employment income, rental income, dividends, savings interest, capital gains, student loan calculations, and child benefit charges.

From HMRC’s perspective only the portion of the accounting fee that relates to the business element is allowable. The personal element is not.

In practice many accountants internally split their fees between business and personal work, even if the client sees a single invoice. As long as the amount claimed is reasonable and clearly relates to the trade, HMRC rarely challenges it. Problems tend to arise where someone claims the full fee even though a significant part of the work was clearly personal.

From experience I can say that being sensible and proportionate is far more important than chasing a perfect split down to the last pound.

Claiming accounting fees for limited companies

For limited companies the position is often clearer because the company is a separate legal entity.

A limited company can claim accounting fees that relate to its own affairs, including:

• Statutory accounts preparation

• Corporation tax return preparation

• Bookkeeping services

• VAT return preparation

• Payroll services and RTI submissions

• Confirmation statements and Companies House filings

• Business tax advice

• HMRC correspondence and compliance support

These costs are incurred wholly and exclusively for the purposes of the company, so they are allowable deductions for corporation tax.

One question I am asked regularly is whether a company can pay for the director’s personal tax return.

The answer depends on what that tax return includes.

If the Self Assessment return only includes income from the company, such as salary, dividends, and benefits in kind, HMRC generally accepts that the company can pay the fee and treat it as a business expense. There is no benefit in kind in this situation.

However if the return includes other personal income, such as rental income from personally owned property, investment income, or income from another business, then the fee relates partly to private matters. In that case either the company should not pay the fee, or the private element must be treated as additional income or a benefit in kind for the director.

This is an area where mistakes can quietly build up over several years, so it is worth getting clear advice and keeping treatment consistent.

Accounting fees for landlords and property income

Landlords often ask whether accounting fees can be deducted from rental income, and the answer is generally yes, but again only for the relevant part.

If you own rental property personally, you can usually deduct accounting fees that relate to:

• Preparing rental income and expense schedules

• Completing the property pages of the Self Assessment return

• Advice on allowable property expenses

• Capital allowances where applicable

• Basic compliance and tax calculations for rental income

These fees are incurred to calculate taxable rental profits, so they are allowable against property income.

What you cannot claim is the portion of the fee that relates to other personal income or general financial planning. If your accountant prepares a full Self Assessment return covering multiple income sources, the fee should be split so that only the property related element is claimed against rental profits.

For landlords operating through a limited company the position mirrors that of other companies. The company can deduct accounting fees that relate to its property business, including accounts, corporation tax, and VAT if applicable.

What about tax planning and advice

Tax advice is another area that causes confusion.

General tax advice that relates to running your business, structuring it efficiently, or complying with tax law is usually allowable. For example advice on VAT registration, payroll structure, or capital allowances is normally deductible.

Purely personal tax planning is not allowable. Advice on things like inheritance tax planning for personal assets, pension planning unrelated to the business, or private investment strategies would not qualify as a business expense.

Where advice covers both areas it should be apportioned, and in practice many accountants already do this internally.

How to record accounting fees correctly

Accounting fees should be recorded as an expense in your books in the period they relate to. For sole traders this is usually straightforward. For limited companies it is important to ensure the invoice is addressed to the company and paid from the company bank account if the company is claiming the cost.

If an accounting invoice covers both business and personal work, only the business portion should be recorded as a business expense. The personal portion should either be excluded or treated appropriately, for example through the director’s loan account.

Keeping invoices and engagement letters is sensible, as they help demonstrate what the fee relates to if HMRC ever asks.

Common mistakes I see with accounting fees

From experience the most common issues are not aggressive claims but simple misunderstandings.

These include:

• Claiming the full Self Assessment fee when much of the work was personal

• Companies paying for directors’ personal tax work without considering benefits in kind

• Claiming fees for non business advice

• Inconsistent treatment from year to year

None of these are usually deliberate, but they can create problems if left unchecked.

Key points to takeaway

Accounting fees are a normal and necessary cost of running a business in the UK, and in most cases they are perfectly allowable for tax. The key is understanding what the fee relates to and being honest about whether it is a business cost, a personal cost, or a mixture of both.

In my experience HMRC is far more concerned with consistency and reasonableness than with minor apportionments. If your accounting fees genuinely relate to running your business and meeting your tax obligations, they are very unlikely to be an issue. Where problems arise is when personal costs are pushed through the business without thought.

If you are ever unsure, ask the question before filing rather than after. It is much easier to get it right upfront than to explain it later.

You may also find our guidance on Can I claim expenses for working from home, and Can I claim for clothes, tools, or training as a business expense, helpful when reviewing related personal tax questions. For a broader overview of Self Assessment deadlines, reporting, and obligations, you can visit our self assessment guidance hub.