Running a fashion business in today’s climate isn’t just about creative flair; it’s about smart financial decisions that help you grow, stay compliant, and keep more of your hard-earned profits. At Pennyhills Accountants, we work with independent designers, online retailers, boutique owners, and fashion startups to help them make the most of every tax-saving opportunity available. If you’re a fashion entrepreneur in the UK, here are the essential tax deductions you should know to reduce your tax bill legally.

Cost of Goods Sold (COGS)

Your production costs are often the biggest line item in your business. Fortunately, they’re fully deductible. This includes:

• Fabrics and textiles
• Trims, zippers, labels, and buttons
• Manufacturing costs (whether outsourced or in-house)
• Samples and prototyping materials

Ensure you keep detailed records of each batch or season’s production runs to support your claims.

Studio, Office, or Workspace Expenses

Whether you’re running your fashion business from a studio in Shoreditch or your spare bedroom, the space you work from is likely deductible. You can claim:

• Rent or a portion of your mortgage interest (if working from home)
• Utilities such as electricity and water
• Council tax (for home-based setups)
• Internet and phone usage (business proportion only)
• Equipment and furnishings used for your workspace

Tip from Pennyhills:

Use a home office deduction calculator or speak to us to ensure you claim the right proportion.

Marketing & Branding Costs

Marketing is essential for any fashion brand, and it’s tax-deductible too. You can claim expenses related to:

• Social media advertising (Instagram, Facebook, TikTok ads)
• Influencer collaborations (if structured as paid promotions)
• Website design and maintenance
• Branding and logo design
• Photography and lookbook production
• Fashion shows or pop-up events (as long as they serve a business purpose)

Travel & Transport

• If you’re heading to trade shows, supplier meetings, or even a courier run to the post office, many of those travel costs can be claimed:

• Train, tube, and bus fares
• Fuel and mileage (45p per mile for the first 10,000 miles)
• Business-related taxi fares
• Parking (but not fines!)
• Hotel stays for business trips
• Meal allowances when travelling overnight

Staff Costs & Freelancers

Whether you have a team of in-house staff or you work with freelance pattern cutters, photographers, or digital marketers, you can claim:

• Salaries and wages
• Employer’s National Insurance contributions
• Freelancer and contractor invoices
• Recruitment fees
• Training costs (if directly related to your business)

Clothing – Yes, But Only Sometimes

A common misconception in fashion is that you can write off all clothing purchases. Unfortunately, HMRC is strict on this. You can claim:

• Branded uniforms or protective gear
• Samples used for reshoots, testing or display
• Stagewear or costumes for promotional purposes (must not be worn personally)

You cannot claim regular clothing even if you wear it for business meetings.

Subscriptions, Tools, and Tech

All tools that directly support your business can be deductible:

• Fashion trade journals and subscriptions (e.g. Drapers)
• Design software (Adobe Illustrator, CLO 3D)
• E-commerce platforms (Shopify, Wix, Squarespace)
• Accounting software (Xero, QuickBooks)
• Email marketing tools (Mailchimp, Klaviyo).

Professional Fees

If you’re working with advisors to grow your brand, you can claim:

• Accountant and bookkeeper fees
• Legal consultations
• Business coach or mentor (if directly linked to improving your business performance)
• Trade mark registration and IP protection costs

Insurance & Licences

Fashion businesses need protection, and these costs are deductible:

• Public liability insurance
• Professional indemnity
• Product liability (especially for physical goods)
• Trade licences or export/import registration fees

Bad Debts

If you’ve sold products to a stockist or customer and they haven’t paid, despite chasing, you may be able to write off the bad debt, provided it’s documented correctly.

How Pennyhills Accountants Can Help You. Every fashion business is different, and so are your tax opportunities. At Pennyhills, we go beyond generic advice. We:

• Help identify all allowable deductions specific to your business
• Ensure compliance with HMRC guidelines
• Assist with VAT schemes tailored to product-based businesses
• Provide clear, jargon-free advice and regular support

Ready to Maximise Your Fashion Brand’s Tax Savings? Whether you’re launching your label or scaling to your next collection, Pennyhills Accountants is here to help you grow confidently and keep more of what you earn.

Book your free consultation today, email us at info@pennyhills.co.uk or WhatsApp us today to get started.