Self-employed tax-deductible expenses: what can I claim?
If you are self-employed, there are certain business expenses you can deduct from your tax bill. Our guide below outlines the expenses you can and cannot claim with HMRC.
It is important to ensure that you pay the right amount of income tax. When you are completing your Self-Assessment tax return, you will need to work out your expenses as you can deduct some of these from your overall turnover to work out your taxable profit and reduce your tax liabilities.
What does ‘allowable expenses’ mean?
Knowing what you can claim can be a bit of a grey area – especially as being self-employed a work pattern can vary significantly from person to person. HMRC has some clear rules around what you can and cannot include, which is why the costs that you can include in your calculation are referred to as ‘allowable expenses’.
What self-employed expenses can I claim?
Your business expenses
If you use business premises, you can claim for maintenance and repair, utility bills, rent, property insurance, and security. You cannot, however, claim for having bought or built your business premises.
You can claim a proportion of your household expenses such as heat and light, council tax, water rates, rent or mortgage interest and certain repairs when you work from home.
Travel and accommodation expenses
You can claim travel and accommodation on business trips and between different places of work.
Running the costs of a car or other vehicle, including petrol, car tax, insurance, repairs, and servicing. If you use the car privately, you can only claim a proportion of the costs equal to how much the car is used for business purposes. This is usually the ratio of your business mileage to your total mileage. It is worth keeping a log of business mileage for a typical journey period, as well as all bills.
- Cars and goods vehicles first 10,000 miles – 45p. After that it is 25p per business mile.
- Motorcycles – 24p
- Bicycles – 20p
Employee and staff salaries count as allowable expenses, as well as Employer’s National Insurance, employees’ pension benefits and any employee childcare provision you make.
Office supplies and equipment
Stationery, printing costs (including toner or ink cartridges), postage, phone and internet bills can all be claimed.
Legal and professional costs
If you use professionals such as an accountant, financial adviser, solicitor, surveyor etc solely for business reasons, you can claim their fees as expenses. You can also claim bank charges.
Most of your marketing costs should count as allowable expenses. This will include mailshots and advertising.
If some jobs require you to have special insurance e.g. Public liability insurance, Professional indemnity insurance or
Travel insurance you can claim these as allowable expenses.
Any specialist clothing (e.g. a uniform, protective clothing or theatrical costume) that you need to do your job is tax-deductible.
The cost of membership of trade bodies or professional organisations is an allowable expense, as is the cost of subscribing to professional publications.
Calculating your business expenses for your tax return
You will generally need to tell HMRC about your allowable expenses when you complete your tax return. Whether you have to tell them just your total expenses or list your actual expenses depends on your turnover/sales.
If you choose to enter a single figure, you still need to work out all your expenses accurately and keep a record just in case HMRC queries your figures and you have clear information to refer back to.
You should also keep receipts or other proof of purchase. You don’t need to include these with your tax return, but you may need to present them if you’re subject to a tax investigation.
In the event you make a mistake on your tax return or submit it late, you could face a fine. To help make the process of completing your self-assessment as smooth and stress-free as possible we have found some really useful guidelines on the government’s website, or feel free to call us on 020 8577 0200 if you have any tax questions related to this topic, or would like any general accountancy advice.