Expense Management: A Practical Guide

Why expense management matters

Lost receipts mean lost tax deductions and lost VAT recovery. A typical SME loses 3–5% of profit each year to poor expense capture.

The stack we recommend

1. Dext or Hubdoc — photograph receipts, OCR extracts the data
2. Xero or QuickBooks — receives the data automatically
3. Pleo or Soldo — pre-paid corporate cards eliminate personal-card expense claims
4. GoCardless / Stripe / Bank feed — pulls in matching transactions

What's allowable

The HMRC test: an expense must be wholly and exclusively for the trade.

Commonly allowable:

• Office costs, software, subscriptions
• Travel to non-permanent workplaces (not home → main office)
• Subsistence on business trips
• Training that maintains existing skills

Commonly not allowable:

• Client entertainment (CT-deductible no, VAT no)
• Staff entertainment over £150/head/year
• Clothing unless it's PPE or a uniform with logo
• Fines and penalties

VAT on expenses

Reclaim input VAT only with a valid VAT invoice. For receipts under £250, a simplified invoice is fine.

Try our business expense tracker — free for all subscribers.