If you’re self-employed or thinking about becoming self-employed, then your business will have various running costs. The good news is some of these will be ‘allowable business expenses’, which means they can be deducted from your turnover so will reduce your overall tax bill.
However, not all business expenses are allowable, and HMRC have very clear rules about what you can and can’t include. We take a look at the expenses you are able to claim.
Office costs
Any items which you’d usually use for less than two years, can be claimed as business expenses. These include:
- phone, mobile, fax and internet bills
- postage
- stationery
- printing
- printer ink and cartridges
- computer software your business uses for less than 2 years
- computer software if your business makes regular payments to renew the licence (even if you use it for more than 2 years)
You can also include items you’ll keep for over 2 years, such as computers and printers, but unless you use cash basis accounting, these may have to be claimed as capital allowances.
If you’re at all unsure about what you can and can’t claim or are thinking about starting a business, please get in touch. We have lots of experience advising the self-employed on allowable business expenses.
Business premises
While you can’t claim expenses for buying or building your business premises, you can claim for:
- rent
- maintenance and repair
- utility bills
- property insurance
- security
If you are working from home, you can also include part of your utility bills, but only the part that is used for your business. Working out what this is can be complicated, so, if you work from home for 25 hours or more a month, you can opt to use HMRC’s simplified expenses. This calculates a flat rate based on the hours you work from home each month and is great for those who don’t have many business expenses.
| Hours of business use per month | Flat rate per month |
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 and more | £26 |
However, it does not include telephone or internet expenses, which will need to be worked out proportionally, and sometimes working out your actual outgoings will save you more money in the end. You can check here which method is best for you or give us a call if you would like some personal advice and guidance.
Travel expenses
You can claim business-related car, motorcycle or van costs, including:
- vehicle insurance
- fuel
- hire charges
- repairs
- servicing
- breakdown cover
As vehicle expenses can be tricky to calculate, you can use HMRC’s simplified expenses which calculates your expenses using a flat rate for mileage instead of the actual costs of buying and running your vehicle.
While you can’t claim for commuting to and from work, you can claim for travel to meetings as well as business travel by train, bus, plane or taxi, and hotel rooms and meals during any overnight business trips. But if your trip is a mixture of business and pleasure, you will need to be able to separate out the business cost if you want to claim for it.
Other expenses you can claim
There are also a number of other business running costs you can claim as allowable business expenses, including:
- Staff expenses including salaries, bonuses, pensions, agency fees, subcontractors and employer’s National Insurance
- Legal and financial costs, such as hiring accountants, solicitors, surveyors and architects for business reasons
- Marketing such as directory listings, advertising and website costs
- Clothing, such as uniforms, protective clothing
- Subscriptions to trade bodies, professional membership organisations and to trade/professional journals
- Training courses, although you can’t claim for training courses that help you start a new business or expand into new areas of business
Need more advice about allowable business expenses?
Working out what is and isn’t allowable can get complicated especially if you are also using your phones, internet or office equipment for personal use. If you need any help or advice about how to fill in your tax return or would like us to manage it for you, please get in touch. And if you’re thinking of starting a new business, we can help you with everything from choosing a business structure to taking on members of staff.
