Business expenses for the self employed

If you’re self-employed, your business will have various running costs. You can deduct those costs that are deemed to be allowable business expenditure to work out your taxable profit.

Allowable expenses don’t include money taken from your business to pay for private purchases. They are defined by HM Revenue and Customs (HMRC) as ‘those expenses that are wholly and exclusively used in the pursuance of your business’.

Costs you can claim as allowable expenses

These include:

  • Office costs, eg stationery or phone bills
  • Travel costs, eg fuel, parking, train or bus fares
  • Clothing expenses, eg uniforms
  • Staff costs, eg salaries or subcontractor costs
  • Things you buy to sell on, eg stock or raw materials
  • Financial costs, eg insurance or bank charges
  • Costs of your business premises, eg heating, lighting, business rates
  • Advertising or marketing, eg website costs
  • Costs you can claim as capital allowances

 

If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, eg:

  • Equipment
  • Machinery
  • Business vehicles, eg cars, vans, lorries
  • If you work from home

 

You may be able to claim a proportion of your costs for things like:

  • Heating
  • Electricity
  • Internet and telephone use

You’ll need to find a reasonable method of dividing your costs, eg by the number of rooms you use for business or the amount of time you spend working from home.

 

You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:

  • Vehicles
  • Working from home
  • Living on your business premises

 

Source: GOV.UK

Contains public sector information licensed under the Open Government Licence v3.0.

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