A receipt in a coat pocket, a subscription paid from a personal card, mileage noted three weeks after the journey – these small details can make a meaningful difference to your Self Assessment tax bill. Understanding the self-employed expenses that you can claim helps you pay the right amount of tax, while keeping your business records useful for planning ahead.
The starting point is simple: a cost must be incurred wholly and exclusively for the purposes of your trade. In practice, that can require judgement. Many self-employed people work from home, use one phone for work and family life, or buy equipment with a useful life of several years. The answer is not always a straight yes or no, but clear records and a sensible calculation usually provide the right route forward.
The rule behind allowable self-employed expenses
HMRC allows deductions for costs that are genuinely connected to running your business. These are deducted from your income before your taxable profit is calculated. Lower taxable profit can mean less Income Tax and National Insurance to pay.
The word “exclusively” matters. A personal purchase does not become allowable simply because you use it occasionally for work. Equally, a cost with both business and private use does not have to be ignored altogether. You can normally claim the identifiable business proportion.
For example, if 60% of the calls on your mobile are business-related, you may claim a reasonable 60% of the bill. The same approach can apply to broadband, heating and use of a car. Keep a note of how you reached the percentage, particularly where the cost is significant. A consistent, evidence-based approach is much easier to support than an estimate made when the tax return is due.
Self-employed expenses that you can claim
The expenses available depend on the nature of your work, but the following are common for sole traders and partners across Greater Manchester.
Office, administration and professional costs
Day-to-day costs of operating your business are usually allowable. This can include stationery, printing, postage, software subscriptions, website hosting, business insurance, advertising and accountancy fees. Bank charges on a business account and card-processing fees are also normally deductible.
Professional memberships may be claimed where they are relevant to your existing work. Training needs more care. A course that updates or maintains skills you already use in your trade may be allowable. Training that gives you the skills to start a new trade or substantially change what you do is normally treated differently and may not qualify.
Travel and vehicle costs
Business travel can be claimed, including train fares, parking, tolls, accommodation for an overnight business trip and reasonable subsistence while travelling. The journey must be for business purposes. Ordinary travel between home and a permanent workplace is generally treated as commuting and is not allowable, even if you are self-employed.
If you use a car or van for business, there are two usual methods. You can claim the business share of actual running costs, such as fuel, repairs, insurance, vehicle tax and servicing. Alternatively, eligible businesses can use simplified mileage expenses, claiming a fixed rate for business miles. The mileage method can reduce paperwork, but it may not always produce the best result where running costs are high.
Whichever method you use, maintain a mileage log showing the date, destination, reason for the journey and miles travelled. Avoid switching methods without checking the implications, especially when a vehicle is bought or sold.
Working from home
If your home is your business base, you may be able to claim part of household running costs. This may include heating, electricity, council tax, mortgage interest or rent, internet use and repairs, where an appropriate business proportion can be identified.
There are two approaches. You can calculate a reasonable share of actual household costs, often based on the number of rooms and the time each is used for work. Or you can use HMRC’s simplified expenses flat rates, based on the number of hours worked from home each month.
The actual-cost method can be more accurate, but it requires stronger records and sensible calculations. Simplified expenses are easier to administer. A further consideration is that using a room exclusively for business can potentially have Capital Gains Tax consequences when you sell your home. Most people have mixed use of a home office, but it is worth taking advice before making an exclusive-use claim.
Equipment, stock and materials
Items bought to resell, and materials used to deliver your service or make products, are normal trading costs. A builder’s materials, a designer’s print samples or a therapist’s consumable supplies are familiar examples.
For larger assets, the tax treatment can differ from a routine expense. A laptop, tools, machinery, office furniture or business equipment may qualify for capital allowances rather than being deducted as an everyday cost. In many cases, the Annual Investment Allowance gives relief in the year of purchase, but the detail depends on the asset and your business circumstances.
Do not overlook smaller equipment either. Replacing a broken work phone, purchasing protective clothing required for your role, or buying specialist tools can be allowable. Everyday clothing is usually excluded, even if you only wear it while working, unless it is a uniform or protective clothing.
Premises, staff and finance costs
Rent and utility bills for separate business premises are generally deductible, as are cleaning, security and repairs. If you employ staff, wages, employer pension contributions, training relevant to their role and certain other employment costs may be claimed. Payroll records need to be accurate and kept up to date.
Interest on a business loan or overdraft may be allowable, subject to the borrowing being used for business purposes. Repaying the loan itself is not an expense – it is repayment of capital. This distinction is easy to miss when reviewing payments from a bank account.
Costs that usually cannot be claimed
Some payments may feel connected to your work but are not deductible from taxable profit. Personal drawings are not an expense. Income Tax payments, National Insurance paid personally, client entertaining, fines and most political donations are also not allowable business deductions.
Client entertaining is a frequent point of confusion. Taking a customer for a meal may be good relationship-building, but it is generally not an allowable deduction for tax. Staff entertainment is treated differently in some circumstances, so keep it separately coded rather than grouping all hospitality together.
You also cannot claim the cost of buying your own business if you take over an existing trade, although professional fees and asset treatment should be reviewed carefully. Where costs are unusual, high-value or partly personal, a short conversation before submitting the return can prevent a costly mistake.
Records turn claims into evidence
A legitimate expense still needs support. Keep invoices, receipts, bank statements, mileage records and notes explaining any business-use percentage. Digital copies are generally acceptable, provided they are clear, complete and safely retained.
For Self Assessment, records normally need to be kept for at least five years after the 31 January filing deadline for the relevant tax year. That is longer than many people expect. A bookkeeping system, dedicated business bank account and regular monthly review make this far less burdensome than sorting a year’s transactions in January.
Separating personal and business spending is not just good compliance. It gives you a clearer view of margins, recurring costs and cashflow. That information is useful when setting prices, deciding whether to invest in equipment or working out how much tax to reserve.
Make a claim that reflects your real business
The best expense claim is neither aggressive nor unnecessarily cautious. It reflects how you actually work, uses a fair basis where costs are shared, and is backed by records you would be comfortable explaining. If your income is growing, your work pattern has changed or you are unsure whether an item is revenue or capital, tailored advice can be worthwhile.
At RK & Co, we help self-employed clients turn bookkeeping and tax records into practical decisions, not just a completed return. A regular review of your costs can give you greater confidence in the figures and more time to focus on the work that grows your business.