What Expenses Can You Claim on Your Self Assessment?

If you’re self-employed, claiming the right business expenses can reduce the amount of profit on which you pay tax.

But there is an important distinction:

Spending money does not automatically make something tax deductible.

HMRC allows self-employed people to deduct certain allowable business expenses when calculating taxable profit. If your turnover were £40,000 and you had £10,000 of allowable expenses, for example, your taxable profit would be £30,000. GOV.UK

So, what can you actually claim?

What is an allowable expense?

An allowable expense is broadly a cost incurred for your business that HMRC permits you to deduct when calculating taxable profit.

Common categories include:

• Office costs
• Business travel
• Staff costs
• Stock and materials
• Insurance and financial costs
• Business premises
• Advertising and marketing
• Professional subscriptions
• Certain training costs

HMRC also makes clear that money taken from the business for your own personal use is not an allowable expense. GOV.UK

The rules in this article relate primarily to sole traders and individuals in business partnerships. Limited companies operate under different rules. GOV.UK

Office costs

Everyday costs of running your business can often be claimed.

HMRC gives examples including:

• Stationery
• Printing
• Printer ink
• Postage
• Business telephone costs
• Business internet costs
• Certain software

The treatment of equipment such as computers can depend on whether you’re using cash basis or traditional accounting. GOV.UK

If something has both business and personal use, you generally claim only the business element.

Phone and internet bills

Your phone does not have to be exclusively for business before there can potentially be an allowable expense.

However, you cannot simply claim the entire bill if much of the usage is personal.

HMRC gives an example of annual mobile-phone costs of £200, of which £70 relates to business calls. In that example, the allowable expense is £70. GOV.UK

The same principle is important when reviewing other mixed-use expenses.

Separate the business element from the personal element.

Working from home

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

HMRC lists examples including:

• Heating
• Electricity
• Council Tax
• Mortgage interest or rent
• Internet
• Telephone use

You need a reasonable method of dividing business and personal use, which could take account of the rooms used and the amount of time you work from home. GOV.UK

Alternatively, eligible sole traders and qualifying partnerships can use HMRC’s simplified expenses for working from home.

The current monthly flat rates are:

These flat rates do not include telephone and internet costs, which can still be considered separately based on their business use. GOV.UK

Travel expenses

Business travel can produce allowable expenses.

HMRC lists costs such as:

• Fuel
• Vehicle insurance
• Repairs and servicing
• Parking
• Vehicle hire
• Breakdown cover
• Train fares
• Bus fares
• Taxi fares
• Flights
• Hotel rooms
• Meals on qualifying overnight business trips

But there are exclusions.

You cannot claim ordinary non-business travel, fines or penalty charges, and HMRC says travel between home and work is not allowable under these rules. GOV.UK

The exact position can depend on the nature of your work and journeys, so don’t assume every journey made while running a business qualifies.

Using your own vehicle for business

There are different methods of dealing with vehicle costs.

Depending on your circumstances, you may calculate the appropriate business proportion of actual vehicle expenses or potentially use HMRC’s simplified-expense mileage method.

If you use simplified expenses, you need to keep records of your business miles. GOV.UK

Whichever method applies, maintaining accurate mileage records makes the eventual Self Assessment considerably easier.

Stock and materials

If your business sells physical products, the costs directly associated with those products can be important.

HMRC permits allowable expenses for items such as:

• Goods bought for resale
• Raw materials
• Direct costs of producing goods

You cannot claim for goods or materials bought for your own private use. GOV.UK

So if you run an ecommerce business, trades business or another operation involving physical products, make sure your purchases are properly recorded.

Staff and subcontractors

If you employ people or use subcontractors, relevant costs can generally be deductible.

HMRC lists allowable staff expenses including:

• Salaries
• Bonuses
• Pension contributions
• Employee benefits
• Agency fees
• Subcontractors
• Employer’s National Insurance
• Relevant staff training

Personal domestic help, such as a nanny, cannot simply be treated as a business expense. GOV.UK

Advertising and marketing

Marketing is another common business expense.

HMRC specifically includes advertising and marketing — including website costs — among the categories that can qualify as allowable business expenditure. GOV.UK

Depending on the circumstances, this could include costs associated with promoting the business online or offline.

The key question remains whether the expenditure genuinely relates to the business.

Professional fees

Professional support can also create allowable expenses.

HMRC says self-employed people can claim qualifying fees for professionals such as:

• Accountants
• Solicitors
• Surveyors
• Architects

But the work needs to be for business reasons.

There are also exceptions. For example, HMRC specifically says that the cost of preparing and submitting your Self Assessment tax return itself cannot be claimed as an allowable business expense. GOV.UK

This distinction is easy to miss.

An accountant may provide several different services to you, and the tax treatment of those costs may not necessarily be identical.

Bank charges and business finance

Certain financial costs can be allowable too.

HMRC gives examples including:

• Business bank charges
• Business credit-card charges
• Overdraft charges
• Interest on business loans
• Hire-purchase interest
• Leasing payments

However, repayment of the actual capital borrowed is not an allowable expense simply because the borrowing was for the business. GOV.UK

In other words, interest and repayment of the loan itself are not the same thing.

Business insurance

Insurance taken out for your business can generally qualify.

HMRC specifically gives public liability insurance as an example of an allowable business insurance policy. GOV.UK

Depending on your business, other commercial insurance policies may also need to be considered.

Professional subscriptions

Some subscriptions can be claimed.

HMRC allows costs such as subscriptions to:

• Trade journals
• Professional journals
• Trade bodies
• Professional organisations related to your business

However, this does not mean every membership you pay for is deductible.

HMRC specifically excludes gym memberships, charitable donations and payments to political parties from this category. GOV.UK

Training courses

Training has an important distinction.

You can claim qualifying training that helps you:

• Improve skills or knowledge you already use in the business
• Keep up with technology in your industry
• Develop skills connected with changes in your industry
• Develop relevant skills that support the existing business

But HMRC says you cannot claim for training that helps you start a new business or expand into a new area unrelated to your existing industry. GOV.UK

So:

Improving an existing business skill can qualify.

Training yourself for a completely different profession may not.

Business premises

If you operate from commercial premises, allowable costs can include items such as:

• Rent
• Business rates
• Water rates
• Utility bills
• Property insurance
• Security
• Repairs and maintenance

The treatment of major alterations, equipment and buildings can be different because capital-allowance rules may apply instead. GOV.UK

What can’t you claim?

Some costs regularly cause confusion.

Depending on the circumstances, expenses you generally cannot simply deduct include:

• Personal spending
• The private element of mixed-use expenses
• Ordinary home-to-work travel
• Parking or other fines
• Gym memberships
• Charitable donations as ordinary business expenses
• Repayment of business-loan capital
• The cost of preparing and submitting your personal Self Assessment return GOV.UK

There are also expenses with more complicated rules, so this should not be treated as an exhaustive list.

What if something is partly business and partly personal?

This is one of the most common issues for sole traders.

Suppose you have:

One mobile phone

You use it 60% for business and 40% personally.

You generally cannot claim 100% of the bill simply because you are self-employed.

You need to identify the appropriate business proportion.

HMRC explicitly states that where something is used for both business and personal reasons, only the business cost can be claimed. GOV.UK

This can apply to phones, internet, vehicles, premises and other mixed-use costs.

What about the £1,000 trading allowance?

This needs particular attention.

HMRC states that you cannot claim allowable business expenses if you choose to use the £1,000 trading allowance instead. GOV.UK

So you should not automatically deduct the trading allowance and then deduct all your actual expenses as well.

Which approach is appropriate depends on your circumstances.

For someone with very few expenses, the trading allowance may be useful.

For someone with substantial legitimate costs, actual allowable expenses may produce a different result.

Do you need receipts for everything?

You need to maintain adequate evidence and accurate records.

HMRC says you should keep records of your business expenses as proof of the costs you claim.

You do not normally send those receipts and records with the Self Assessment return, but you need to retain them in case HMRC asks to see them. GOV.UK

Good records might include:

• Receipts
• Supplier invoices
• Bank statements
• Mileage logs
• Digital invoices
• Payment confirmations
• Accounting-software records

The important thing is being able to support the figures included in your return.

Don’t claim expenses just because someone online says you can

Tax content on social media often reduces expense rules to:

“You’re self-employed, so put it through the business.”

That is not a reliable test.

The nature of the expenditure, business purpose, private use and accounting method can all affect the correct treatment.

An expense that is perfectly legitimate for one business may not be allowable in the same way for another.

Frequently Asked Questions

Can I claim my mobile phone?

You can potentially claim the business element of your phone costs. Where the phone is used for both business and personal purposes, HMRC says only the business proportion is allowable. GOV.UK

Can I claim for working from home?

Potentially. You can calculate an appropriate business proportion of certain household costs or, if eligible, use HMRC’s simplified-expense flat rates. GOV.UK

Can I claim business travel?

Qualifying business travel can be allowable, but personal travel and ordinary travel between home and work are excluded. GOV.UK

Can I claim my accountant’s fees?

Qualifying accountancy services for business purposes can be allowable, but HMRC specifically excludes the cost of preparing and submitting your personal Self Assessment tax return. GOV.UK

Can I claim a gym membership?

Not as an ordinary professional subscription expense. HMRC specifically lists gym membership fees as non-allowable under its subscriptions guidance. GOV.UK

Do I need to send receipts with my tax return?

No. You normally keep the supporting evidence rather than sending it with the return, but HMRC can ask to see it. GOV.UK

Final thoughts

Allowable expenses are not about finding as many things as possible to “put through the business.”

They’re about making sure your taxable profit reflects the legitimate costs of running that business.

Missing genuine expenses could mean paying more tax than necessary.

Claiming personal or non-allowable expenditure could mean your return is incorrect.

The better approach is to keep clear records throughout the year and review any uncertain expenditure before your Self Assessment is submitted.

At Merranti Accounting, we help sole traders and business owners prepare their accounts and Self Assessment returns, identify relevant allowable expenses and make sure the figures reported to HMRC are properly supported.

Contact Merranti Accounting →

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Written by Stephen Watts ACMA

Accounting Director, Merranti Accounting

Stephen is Accounting Director and co-founder of Merranti Accounting. He has extensive commercial finance and accounting experience and works with businesses on accounting, tax, management information, financial strategy and business planning.

Meet Stephen and the Merranti team →