What expenses can I claim being self employed?

A look at the allowable expenses that you can claim being self employed.

Knowing what expenses you can claim is key to reducing your tax bill. Are they allowable or are they not, this is the question that we're going to answer.

Not all self employment expenses can be claimed. HMRC clearly outline what you can and can not claim. HMRC only allow you to claim expenses that are strictly related to your business. By understanding which expenses are claimable, you will pay the right amount of tax. 

So, what can you claim? HMRC break allowable expenses into categories, each include array of expenses you can claim. 

Cost of goods bought for resale or goods used

This includes the cost of raw materials, direct costs of producing goods sold, adjustments for opening and closing   stock, commissions, and any discounts. If you’re a taxi or minicab driver, or in theroad haulage industry, include your fuel costs. 

Construction industry – payments to subcontractors

This includes the total payments you made to subcontractors or any person or company for any type of construction work. If you take on subcontractors in the construction industry you may need to register as a contractor in the Construction Industry Scheme (CIS )

Wages, salaries and other staff costs

This includes salaries, wages, bonuses, pensions, benefits for employees, agency fees, subcontract labour costs (not included elsewhere), and employer’s NICs. Don’t include payments to yourself, your own pension payments or NICs. Being self employed you can not include wages for yourself.

Car, van and travel expenses

This includes car and van insurance, repairs, servicing, fuel, parking, hire charges, vehicle licence fees, motoring organisation membership, train, bus, air and taxi fares, hotel room costs and meals on overnight business trips. 

Rent, rates, power and insurance costs

This includes, for example, rent for business premises, business and water rates, light, heat, power, property insurance, security, and the business use of your home (business proportion or simplified expenses amount). 

Repairs and maintenance of property and equipment

This includes any repairs and maintenance of business premises and equipment. 

Phone, fax, stationery and other office costs

This includes phone and fax running costs, postage, stationery and printing costs, small office equipment and computer software (if under 2 years old). 

Advertising and business entertainment costs

This includes advertising in newspapers and directories, mailshots, free samples, and website costs.

Interest on bank and other loans

This includes any interest on bank and other business loans, fees for buying goods and hire purchase (don’t include any repayments you make against the borrowed amount). 

Bank, credit card and other financial charges

This includes any bank, overdraft and credit card charges, hire purchase interest and leasing payments, and alternative finance payments. 

Irrecoverable debts written off

This is any amount in your turnover that is unpaid and written off. 

Accountancy, legal and other professional fees

This includes fees for accountants, solicitors, surveyors, architects and other professionals and indemnity insurance premiums. 

Depreciation and loss/profit on sale of asset

Depreciation of equipment or cars, and losses on sales of assets aren’t allowable expenses. 

Other business expenses

This includes; trade or professional journals, subscriptions, other sundry running costs.

With all expenses, if there is a private element, for example mobile phone, you will need to disallow a % based on reasonable business to private use. This calculation needs to be documented and reasonable. If you use you mobile 5 days a week for business and 2 days for private, a reasonable private proportion would be 2/7th's of the costs to disallow. 

You will need to keep all records for at least 7 years. 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.

Tax is complicated and should be taken very seriously. Here at Howards Accountants, we can provide the complete end to end service. From setting you up with HMRC, guiding you though your first year to filing your Tax Return all from £25pm. We offer fixed fees with unlimited support at no extra cost and no surprise fees, perfect for budgeting and the clients that need that extra support.

Get in touch to see how we can help you.