Common Expense Categories

Where do your business costs go on the P&L? A guide to the four expense categories in TinyTax's micro-entity format.

Where do your business costs go on TinyTax's P&L? This guide explains each expense field and what to include, following the micro-entity format under FRS 105.

The Four Expense Categories

TinyTax's P&L uses the statutory micro-entity format. All your business costs go into one of four fields:

Field	What goes here
Cost of raw materials and consumables	Materials, stock, packaging, supplies used to produce goods or deliver services
Staff costs	Salaries, wages, employer National Insurance, pension contributions, employee benefits
Depreciation	Reduction in value of equipment, vehicles, and other fixed assets in your accounts
Other charges	Everything else — rent, insurance, subscriptions, bank charges, professional fees, utilities, travel, office costs

ℹ These four categories cover ALL your business expenses. If you're not sure where something goes, it almost certainly belongs in Other charges.

Cost of Raw Materials and Consumables

This is your direct cost of producing goods or delivering services. Include:

Raw materials and components
Stock purchased for resale
Packaging and shipping materials
Consumable supplies used in production
Subcontractor costs directly related to production

Don't include: Overheads like rent, utilities, or office supplies — those go in Other charges.

Staff Costs

Everything related to employing people. Include:

Gross salaries and wages (including director's salary)
Employer National Insurance contributions
Employer pension contributions
Employee benefits (health insurance, company car benefit costs)
Statutory sick pay, maternity pay

Don't include: Subcontractor or freelancer invoices — those go in Cost of raw materials (if production-related) or Other charges (if not).

Depreciation

The accounting write-down of your fixed assets. Include:

Depreciation charges from your accounts
Amortisation of intangible assets
Impairment losses on fixed assets

ℹ Depreciation is automatically added back in the tax computation (it's a disallowable expense for tax purposes). TinyTax handles this — you don't need to adjust it yourself.

Other Charges

This is the catch-all for every business cost not covered above. Common items include:

Category	Examples
Premises	Rent, rates, service charges, utilities (gas, electric, water)
Office costs	Stationery, printing, postage, phone, broadband
Professional fees	Accountant, solicitor, tax software subscriptions
Insurance	Business insurance, professional indemnity
Travel	Business travel, mileage, accommodation
Marketing	Advertising, website costs, business cards
Bank charges	Account fees, transaction charges, interest paid
Repairs and maintenance	Equipment repairs, property repairs (if not capitalised)
Subscriptions	Trade memberships, software licences
Sundry expenses	Anything else not covered above

Mapping From Bookkeeping Software (Xero, QuickBooks, FreeAgent, Sage)

If you run a P&L report from your bookkeeping software, the headings won't match TinyTax's four fields exactly. Here's how to translate them:

Typical bookkeeping layout → TinyTax field:

Bookkeeping item	TinyTax field
Cost of Goods Sold, Cost of Sales, Direct Materials	Cost of raw materials
Direct Wages, Labour, Subcontractors (production)	Cost of raw materials (if production) or Staff costs
Salaries, Wages, Employer NI, Pension	Staff costs
Bank charges, Insurance, General Expenses, Rent, Vehicle, Telephone, IT, Legal	Other charges
Depreciation	Depreciation

⚠ If your bookkeeping software shows salaries inside an Administrative costs or Overhead total, do NOT include them in Other charges. Salaries always go in Staff costs, regardless of how your bookkeeping software groups them. Putting them in both fields will double-count them and produce an incorrect loss.

Example: A Xero P&L shows Administrative Costs = £25,771 (including Salaries of £16,760). Enter:

Staff costs: £16,760 (salaries) + any direct wages
Other charges: £25,771 − £16,760 = £9,011 (admin costs excluding salaries)

What About Disallowable Expenses?

Some costs are included in your P&L but aren't deductible for tax purposes. Common disallowable expenses include:

Client entertaining — meals, drinks, events for clients
Fines and penalties — parking fines, HMRC penalties, court fines
Depreciation — added back automatically (capital allowances replace it)
Charitable donations — claimed separately, not through the P&L

TinyTax has a separate Disallowable expenses field in the tax computation section. Enter the total of non-deductible costs there — they'll be added back to your taxable profit.

Common Questions

Q: My accounting software has 20+ expense categories — how do I fit them into four fields? A: Add up all your direct production costs → Cost of raw materials. Add up all staff-related costs (salaries, wages, employer NI, pension) → Staff costs. Take your depreciation figure → Depreciation. Everything else → Other charges.

Q: My bookkeeping P&L shows salaries inside the Administrative Costs total — do I include them in Other charges? A: No. Salaries always go in Staff costs, even if your bookkeeping software groups them under administrative or overhead costs. When translating from a bookkeeping P&L, subtract any wages and salaries from your admin total before entering the remainder as Other charges. If you include them in both fields, they'll be double-counted and your profit will be understated.

Q: Where do I put director's loan interest? A: Interest paid on a director's loan to the company goes in Other charges. If the director is charging interest, it's also a disallowable expense (add it to the disallowable expenses field).

Q: I'm a property company — where do I put repairs? A: Property repairs go in Other charges. They reduce your property income for tax purposes. For capital improvements (structural changes, extensions), consider whether capital allowances apply instead.

Q: Where do I put the cost of filing with HMRC or Companies House? A: Other charges. Filing fees and tax software subscriptions are allowable business expenses.

Q: My company only has a few small expenses — do I need to split them across fields? A: If all your costs are general overheads with no staff costs or raw materials, you can put everything in Other charges. Only use the other fields if you have costs that genuinely belong there.

Q: Does HMRC require a detailed breakdown of expenses (e.g., marketing, rent, equipment separately)? A: No. For micro-entities under FRS 105, the four-category format is the legally prescribed format — it is what UK law requires, not a limitation of the software. HMRC does not require you to itemise every expense separately in your CT600 or accounts. The detailed breakdown lives in your bookkeeping records, which HMRC can request during an enquiry. The old HMRC online filing tool collected more granular data, but that level of detail was not a legal requirement — it was just how that tool was built.

Q: The old HMRC tool had individual fields for marketing, rent, equipment etc. — why does TinyTax not? A: The old HMRC online service collected extra granular data in a custom format. Statutory accounts for micro-entities only require the four FRS 105 categories. TinyTax uses the correct statutory format, which is also fully accepted by HMRC. Your detailed expense records should be maintained in your bookkeeping software.

Still Have Questions?

If you're unsure where a specific expense belongs, get in touch.

Was this guide helpful?

Thanks for your feedback!