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What Expenses Can a Self-Employed Person Claim?
Allowable expenses are genuine costs incurred for business purposes that can be deducted when calculating taxable profit, subject to the rules that apply to the particular expense. The key principle is that a business cost is not automatically allowable just because it is paid from the business bank account.
Common self-employed expenses
Depending on the business, common categories include office costs, professional subscriptions, business insurance, advertising, certain travel costs, business phone and internet use, software, professional fees and equipment. The treatment can vary, particularly where something has both business and private use.
What about working from home?
Home-working costs require care. You may be able to claim certain additional household costs where the conditions are met, or use an applicable simplified method. The correct approach depends on your circumstances and records.
Can I claim mileage?
Business journeys can be treated using the relevant mileage method or actual vehicle costs depending on the circumstances and method chosen. Keep a mileage record showing the date, destination, business purpose and distance.
Accounting Hire has a Business Mileage Calculator to help estimate a mileage allowance. It is a planning tool rather than a substitute for checking the current HMRC rules.
What records should you keep?
- Receipts and invoices.
- Bank statements and payment records.
- Business mileage logs.
- Evidence of subscriptions and recurring services.
- Notes explaining unusual or mixed-use costs.
What are common mistakes?
Typical problems include claiming personal spending as business expenditure, failing to keep evidence, mixing business and private journeys, and assuming that a cost is allowable without checking its tax treatment.
How can you make expenses easier?
Use a dedicated business account where appropriate, photograph receipts promptly, reconcile transactions regularly and create sensible expense categories. If you use an accountant, agree who is responsible for bookkeeping and who checks the tax treatment.
Good expense records are not just about reducing tax. They give you a clearer view of your true operating costs and therefore help with pricing, cash-flow forecasting and business decisions.
What makes an expense allowable?
The key issue is whether the cost relates to the business and satisfies the relevant tax rules. Not every purchase that helps you work is automatically deductible, and some costs have special rules. The safest approach is to understand the purpose of the expense, retain evidence and avoid treating personal spending as a business cost merely because it is convenient.
Common categories of self-employed expenses
Depending on the business, common categories can include office costs, business insurance, professional subscriptions, advertising, certain travel costs, equipment, software, accountancy fees and some costs of working from home. The detailed treatment depends on what was purchased and how it is used.
What about mixed business and personal use?
Mixed-use costs require care. If an item or service is used partly for business and partly privately, you may need to apportion the business element rather than claim the full cost. Keep a reasonable record of how you arrived at the business proportion. This is particularly important for items such as vehicles, phones, internet services and home working costs.
Why records matter as much as the expense
A bank transaction on its own may not explain what you bought, why it was needed or whether it was business-related. Keep invoices, receipts and other supporting evidence in an organised system. Digital accounting software can make this easier and reduces the risk of losing paperwork.
What expenses should you question before claiming?
- Personal clothing that is suitable for ordinary everyday use.
- Private meals or entertainment that do not meet the relevant business rules.
- Personal household costs with no reasonable business allocation.
- Purchases made mainly for private use.
- Costs where you cannot explain the business purpose.
Capital purchases are not always treated like everyday expenses
Equipment and other assets can have different tax treatment from routine revenue expenses. Do not assume that buying an expensive computer, vehicle or piece of equipment means the whole purchase can simply be deducted in the same way as stationery. Capital allowances and other rules may apply.
How good expense records improve your business
Good expense records are not just about reducing tax. They show where your money is going and help you price your products or services properly. If software subscriptions, insurance, travel and professional fees are rising, your pricing may need to change as well.
For broader business planning, explore the Accounting Hire calculators, and if you want professional help with tax and bookkeeping, use the accountant directory.
When should you ask an accountant?
Ask for advice where an expense is unusually large, has mixed personal and business use, involves an asset, relates to property or vehicles, or has a tax treatment you do not understand. Getting the treatment right before filing is generally easier than correcting an error later.