What expenses can you claim when you're self-employed?

One of the biggest questions we hear from self-employed people is "Can I claim this as a business expense?"

And it's a good question!

Claiming allowable business expenses can reduce your taxable profit, which may reduce the amount of tax you pay.

But not everything you spend money on will qualify.

What are allowable expenses?

Allowable expenses are costs incurred for your business that HMRC permits you to deduct when calculating your taxable profit.

For example, if your business earns £30,000 and you have £5,000 of allowable expenses, your taxable profit would generally be £25,000.

Common expenses you may be able to claim

Depending on your business, these might include:

• Office supplies and stationery.

• Business-related software and subscriptions.

• Website hosting and advertising.

• Professional and business insurance.

• Business telephone and internet costs.

• Accountancy fees relating to your business accounts.

• Business travel and relevant vehicle costs.

• Stock and materials purchased for your business.

• Training that maintains or updates skills used in your existing business.

The important thing is that the expense must qualify under HMRC's rules.

What about working from home?

If you work from home, you may be able to claim a proportion of certain household costs.

Alternatively, you may be eligible to use HMRC's simplified expenses rules, which provide flat-rate deductions based on your working hours.

The right approach depends on your circumstances.

What if something is partly personal?

You can generally only claim the business-related proportion.

For example, if you use your phone for both business and personal calls, you would need to identify a reasonable business percentage rather than claiming the full bill.

What can't you claim?

Some common examples include personal shopping, ordinary everyday clothing, most client entertainment, fines and other private expenses.

You also can't simply claim every purchase just because you paid for it using your business bank account.

And if you use the £1,000 trading allowance instead of deducting actual business expenses, you can't claim those expenses as well.

Keep good records

Whatever expenses you claim, make sure you have appropriate records to support the figures.

A simple spreadsheet or accounting software can make preparing your tax return much easier.

Need help with your self assessment?

Returnly offers straightforward self assessment tax returns for £199 including VAT, using organised, ready-to-use records.

Check your eligibility to see whether our service is right for you.