Self employed: what expenses can you claim?

There are many expenses that you can claim as a self-employed and pay less tax.

Before we go into the actual list, it’s very important to know which accounting method you use: cash, traditional, or simplified.

Here are the costs you can claim:

1. Office, technology, and equipment

Just claim items you’d normally use for less than 2 years as allowable expenses.

Rent and utilities

You can claim expenses for:

  • rent for your office (including co-working spaces)
  • property insurance
  • security
  • using your home as an office (but only the part that’s actually used for business - you must calculate a percentage)
  • phone, fax, and internet bills
  • water, electricity, and heating bills
  • repairs and maintenance

Hardware and software

You can claim the equipment as:

  • allowable expenses if you use cash basis accounting.
  • capital allowances if you use traditional accounting - and if you plan to use this equipment for more than 2 years.

Stationery

You can claim things like:

  • postage
  • paper, pens, etc.
  • printing
  • printer ink and cartridges

Clothing expenses

If you need to use special uniforms, protective gear, or costumes (say, you're an actor), then you can claim these for work.

Of course, you cannot claim everyday clothing (not even a business suit).

2. Transport expenses

You can claim any transport expenses related to your sole trader business:

  • car insurance
  • maintenance and repairs
  • fuel
  • parking fees
  • flight tickets and train, bus, and taxi fares
  • hotel rooms (even Airbnb) and meals for overnight business trips

How you claim depends on how you do your accounting:

  • If you use cash basis, you simply record your payments. You can also only claim cars as capital allowances - the rest just as expenses.
  • If you use traditional accounting, you record the invoices for these services. You can also claim the cost of any vehicle as capital allowance.
  • You can also choose to use simplified expenses and calculate a flat rate for mileage instead of the actual costs of buying and running your vehicle. You can’t claim cars as capital allowances, however.

You also can’t claim as transport expenses:

  • any driving or travel cost that is not for business (of course)
  • fines
  • travel between home and work

3. Staff expenses

You can claim costs for hiring other people (subcontractors).

You can also claim for:

  • trade body memberships if they are useful for your sole trader business:
  • trade or professional journals

4. Reselling goods

If you’re producing a physical good, you can also claim:

  • goods for resale (stock)
  • raw materials
  • direct costs from producing goods

5. Legal, accounting, and financial fees

You can claim various fees like accountants (including TaxScouts) and solicitors.

You can also deduct costs for:

  • bank, overdraft, and credit card fees
  • interest on loans
  • leasing payments
  • insurance (that you need for business)

There are only a few legal costs that you can't claim:

  • legal costs of buying property or equipment - unless you use traditional accounting, in which case you can claim them as capital allowances
  • repayments of loans, overdrafts or finance arrangements
  • any fines

It’s very important to note that if you’re using cash basis then you can only claim up to £500 in interest and bank fees.

6. If your customer does not pay you

If you’re using traditional accounting, you can claim them as "bad debts" (of course, if you’re sure that you won't recover them in the future - at all).

If you're using cash basis, there's nothing you can do besides taking the matter to court.

7. Sales and marketing

You can claim allowable business expenses for any kind of marketing costs:

  • advertising in newspapers, on Google, or Facebook, etc.
  • website development, hosting, etc.
  • free samples

You can not claim for entertaining clients, suppliers, and customers - so a business lunch might be acceptable, but a night out with a lead is not.

How to claim expenses and allowances

Regardless which method of accounting you use, you must keep records of all your business expenses as proof of your costs. HMRC doesn't need them for your tax return, but you might get asked for them if you ever get audited!

On our website you can do it with just a few clicks and a spreadsheet or your phone.

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