What Expenses Can You Claim As Self Employed on Your Self Assessment Tax Return

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What Expenses Can You Claim As Self Employed on Your Self Assessment Tax Return

One of the perks of being self employed is that you get to claim expenses against your income.  Claim correctly and you’ll reduce the amount of tax you have to pay. Claim wrongly and you could face penalties.

There are rules set out by HMRC which expenses you CAN claim for (allowable expenses) and those you CAN’T (disallowable expenses).

What Expenses Can You Claim As Self Employed

When you are self employed generally speaking all business expenses are tax allowable if they are ‘wholly, necessarily and exclusively’ incurred in the carrying out your work.

Here’s a couple of examples of allowable expenses:

If you are a Self Employed Web Designer and pay for hosting to host your clients websites, then the cost of this hosting subscription will be an allowable expense.

Or say, you are a Self Employed Bookkeeper and have to travel to a meeting with a client at their offices, then the cost of travel will be an allowable expense.

However there are special rules around things like business travel, entertainment and training that you should make yourself aware of.

Expenses Can You Claim As Self Employed

Here are some typical expenses you can claim as self employed against your taxes.

Direct Costs

The costs of any goods bought for resale, to make you own goods and stock are allowable expenses on your tax return.

Wages

Any wages you pay to salaried staff or freelancers are allowable expenses.  Along with employers national insurance, pensions and bonus’.

Business Travel

Claiming business travel is a complex area.  I have written a separate guide to Claiming Business Travel, along with templates and a demo of how I log my business travel.

When it comes to business travel when you are self employed you can generally claim travel away from your base of work for things like:

  • Visiting clients for new or existing business;
  • Seeing suppliers;
  • Overnight stays (for business);
  • Training courses.

If you choose to use your personal car, then you can claim mileage at the HMRC set rates to cover the cost of using your car.

The current HMRC’s mileage rates are 45p for the first 10,000 business miles and 25p per mile thereafter. The rate covers the cost of fuel, servicing, tax, MOT and depreciation of a vehicle.

Parking charges are also allowable but parking fines are not.

Use of Home

If you choose to work from your home then there are rules that will allow you to claim either a flat rate each week or an amount for the running costs of doing so from your home as a portion of your household bills such as gas, water, electricity or rent).

You can read my complete guide to Claiming for Your Home Office Here.

Clothing

You can claim for the costs of branded uniforms that you have for your business. However you cannot claim for non branded uniforms, unless they are for safety reasons.

Dual use clothing is also not an allowable expenses such as business suits.

Office Rent

If you choose to rent business premises, then you can claim as a business expense all:

  • Rent/lease payments,
  • Business and water rates,
  • Lighting,
  • Heating,
  • Property and contents insurance.

Website

Websites are essential these days and you can claim the expense of getting your website and hosting it against your taxes, along with your email.

Marketing

If you invest in marketing and advertising such as email campaigns, leaflets, flyers and business cards are all allowable business expenses.

Telephone and Internet

Your mobile phone and data is an allowable expenses.  But only the business portion. See below on how to handle dual use expenses.

Insurance

When you are self employed insurance brings peace of mind for you and your customers.

Insurance can be confusing and I have written a guide on Business Insurance here, along with where you can find some sneaky discounts.

Business insurance, like PI or Employers policies are an allowable expense.

Trade or Professional Journals and Subscriptions

Whilst learning a new skill is not an allowable expense.  The cost of maintaining a new skill with journals, subscriptions and training  can be claimed against taxes.

Professional Fees

Any legal fees or accountants fees you pay will be allowable against your taxes – providing they are all in relation to you business.

Payment Processing Fees

If you choose to take card payments in your small business then this tends to attracts charges.  These charges will be tax allowable.

Business Bank Account

It is advisable to open a separate business bank account (and recommended by HMRC). If you haven’t opened one up yet then here’s how you can do it super quick (and get a free trial).
You can claim any business bank account charges and interest against your taxes.  Although if you choose to use the cash basis for your tax return then interest is capped at £500.

 

Claiming Business Expenses with Personal Use

You may have expenses which you pay for and use both personally and for business, like your mobile phone.  In these cases you can only claim a portion as an allowable expense.

So if you use your mobile phone for 60% work and 40% personal, then you take 60% of the total costs to put against your taxes.

 

Expenses You Cannot Claim When You’re Self Employed

After years of people pushing the boundaries and claiming for some questionable expenses, HMRC have a growing list of expenses that are disallowable.

Here are some common examples of disallowable expenses:

  • HMRC Fines
  • HMRC Penalties;
  • Parking fines;
  • Client Entertainment;
  • Lunches, unless in special circumstances and those associated with business travel;
  • Personal telephone calls;
  • Personal use of assets like a laptop;
  • Travel to office or fixed place of work;
  • Dual use clothing;
  • Non branded clothing;
  • Training courses to learn a new skill.

What Records Should You Keep

Everything!

Once you are self employed you need receipts to support all the expenses you want to claim.

Struggling to file your Business Receipts? Read my recommended way to Organise Your Business Receipts Here.