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Essential Expense Tips When Using Accounting Software

Updated: Oct 8

Whether you're diving into Xero or another bookkeeping tool, it’s easy to assume the tech is doing all the heavy lifting. However, a few simple habits can make a world of difference. They can help you avoid expensive mistakes later on. This advice is relevant to everyone, but it is particularly important for those embarking on their own bookkeeping journey within Xero or another accounting app.


The most important aspect to remember is this: We will assume that the bank account linked to your software is “work-only” unless you notify us. This means we assume all expenses are tax-deductible and all income is earned income unless you let us know otherwise.


So keep reading for a few reminders that will help you stay on track!


A female at a desk reviewing receipts

Travel & Subsistence


Travel expenses can add up quickly. Here are some key points to remember:


  • Train fares, flights, taxis to gigs, rehearsals, meetings, and studio sessions are all allowable expenses.

  • Commuting to a regular place of business, such as a PAYE job or a recurring freelance job, is not allowable. These costs should be allocated to a personal account (e.g., owner drawings) if using software.

  • If there is a mixture of business and personal elements in your travel costs, such as trips abroad that combine work and leisure, you need to allocate an appropriate business use percentage (BU%).

  • You are best placed to decide what that percentage will be. We can share our experience with common percentage claims on items like mobile phones and TFL, but you know your own working pattern best.

  • Using a dedicated work debit card or Oyster card can simplify this process.

  • If you are claiming car mileage, you cannot also claim costs related to the car itself, such as MOT, servicing, or fuel. You must choose one method and maintain that choice for the duration of the vehicle's ownership.

  • Subsistence is related to travel. Generally, if the travel is allowable, the subsistence will be too.

  • If you’re using Xero, there is functionality that allows you to split a specific expense line into BU% and personal use percentage (PU%). Let us know if you need a video on how to do this!

  • You can even update your Xero account to include a “rule” that always allocates certain costs in this way. However, this needs to be added manually; it’s not a default within the software.


Wardrobe & Grooming


When it comes to wardrobe and grooming, here are some guidelines:


  • Costumes or stage outfits that are clearly for performance, such as black concert wear, tails, or DJ outfits, are allowable.

  • HMRC’s language likens allowable items to costumes. If it resembles a costume, it is likely acceptable.

  • Branded merchandise worn for promotional shoots or performances is also allowable.

  • Haircuts, makeup, and grooming are generally seen as personal upkeep by HMRC. Therefore, they are not allowable because they are not wholly and exclusively for work.

  • That said, we support a small BU% claim on appearance-related costs due to the public-facing nature of your performance work. We recommend a small percentage, such as 5% to 10% of the total cost. Keep in mind that this is open to challenge by HMRC. If you prefer not to risk explaining your spa habits, it’s best to avoid claiming it altogether. 😊


Business Use vs Personal Use


Mixed-use Items


For mixed-use items like mobile phones, internet, and cars, you can claim a portion based on reasonable usage:


  • If your phone is 70% work and 30% personal, you can claim 70% of the bill.

  • The same applies to broadband, laptops, software subscriptions, etc.

  • We’re fine with claiming 100% on services like Spotify, iTunes, and Nkoda, as these are essential for your work as a musician.

  • If you choose to go with actual car costs instead of mileage, reasonable use applies here too.


Use of Home


We ask you to complete our Use of Home (UOH) form to help us suggest a reasonable percentage of costs such as utilities, rent, or mortgage. This form looks at the total amount of time you spend working from home as a percentage of total hours in a week- FYI, that’s 168!


What’s Important


  • Keep a rough log or notes. HMRC doesn’t require minute-by-minute tracking, but you should be able to justify your estimates.

  • We recommend taking a representative week of work and keeping a log of your usage. This log can serve as justification for the percentage claim you’ve made.


Final Tips for Expenses


  • Remember, we don’t know what we don’t know. If you send us a spreadsheet with total values, we will assume that you’ve taken costs based on the guidance outlined above.

  • In the case of software, we emphasize the importance of a work-only bank account. This ensures that the assumptions we make will be accurate. Please don’t let us assume your holiday spending was a work trip.


By following these guidelines, you can ensure that your bookkeeping remains accurate and compliant. It will help you maximise your deductions and minimize the risk of errors.



We’re proud to be a Xero partner. If you’re thinking about moving your accounts online, Xero is one of our top recommendations for musicians and freelancers. It’s intuitive, HMRC-recognised, and makes keeping on top of your finances so much easier.


👉 Check out Xero here (this is our partner link – if you sign up through it, we may earn a small commission, at no extra cost to you).



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