Self-employed expenses: what you can claim (mostly)

Kirsty Young Expenses, Freelancers

If you are just starting out as self-employed, or have been for a while, here’s a refresher on the types of expenses you can claim in your tax return.

Claiming your self-employment expenses will help make sure you are only paying the right amount of tax. For example, if you have £25,000 in from your clients or customers, and your expenses add up to £5000, you will only pay tax on the actual profit of £20,000.


What are the HMRC self-employment allowable expenses?

Many owners ask for ‘the list’ of everything you can claim. Unfortunately a list of allowable expenses doesn’t exist in the tax law!

What does exist is a condition that says:

  • An item of expenditure must be incurred ‘wholly and exclusively’ for the purposes of the trade, profession or vocation in order to be tax deductible.

The issue is so detailed that HMRC have an entire ‘manual’ on the topic! There’s also a summary version which isn’t quite so detailed.


The most common self-employed expenses

There are some business expenses that are applicable for most self-employed businesses, so we’ve put together a short list here.

Our “usual suspects” list of self-employed expenses includes:

  • Insurance (Public liability, rather the say personal life insurance)
  • Phone
  • Stationery
  • Advertising
  • Printing
  • Accountancy
  • Software
  • Materials
  • Postage
  • Travel / Subsistence
  • Amounts paid to sub-contractors / freelancers
  • Actual wages to employees (paid through a payroll system to them, not your own wages)
  • Office costs
  • Bank charges and interest
  • Uniform/protective clothing/costumes (not general clothing even if worn for work)*
  • Working from home costs*
  • Vehicle costs*
  • Business Entertainment**
  • Training**

*These costs have very specific rules that could be a blog in their own right! You can see further commentary on this in our Self Employed Guide for Sole Traders.

**These two are a bit of an exception.

  • Business Entertainment (taking clients out for meals / coffee etc) is a business expense, but not allowable for tax purposes.
  • The rules on training for the self-employed are very specific and not particularly generous. This leaves quite a lot of training not claimable as a tax deduction.


Business expenses and buying equipment

You can claim for larger items of equipment, such as vans or computers, but these come under a different set of rules known as Capital Allowances for the self-employed.

For most items, the effect on your tax bill is actually the same. You will get relief in the year you buy the equipment, but it’s a different set of rules and different boxes on the tax return.


How do I ‘claim’ these expenses?

When we talk about “claiming self-employed expenses” what we are really talking about is putting the figure in the right box on your self-assessment tax return that you need to fill each year.

You don’t need to provide proof of all your self-employed allowed expenses with your tax return. However, you should keep receipts and good records, just in case you are asked for evidence if HM Revenue & Customs were to check your return.


Self-employed only!

For clarity, this blog relates to the self-employed only. Many of these costs will be the same for limited company owners, but the rules are quite different for companies in some areas.


Confused about claiming self-employed expenses?

We’re not surprised! This summary blog only touches the surface. Talk to your accountant to check what expenses apply to your business, and remember to keep every single receipt, just in case!

You can also book a consultation with us if you just want to talk through claiming expenses ion your self-assessment tax return. We offer a paid 1 hour, 1-2-1 consultation so you can ask simple questions of one of our team of experienced and approachable accountants. You don’t have to be or become a client either

If you want us to become your accountants and do your tax returns for you, so you can spend more time on your business and less time on your paperwork, just contact us.