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.

A failed prototype, a new production process or months spent resolving a technical problem can feel like ordinary day-to-day business activity. Yet, where the work seeks an advance in science or technology, it may support a valuable Corporation Tax claim. Knowing how to claim R&D relief means looking beyond the label of “research” and understanding the technical uncertainty your business has worked to overcome.

For many owner-managed companies, the opportunity is missed because the development work is carried out by the people closest to the business: directors, engineers, software teams, designers and production staff. The project may not take place in a laboratory, and it does not need to result in a successful product. What matters is the nature of the work, the evidence behind it and a claim that reflects HMRC’s rules.

What R&D relief is designed to support

R&D tax relief is available to companies carrying out qualifying research and development. The purpose is to encourage businesses to invest in solving scientific or technological problems that cannot be readily resolved using publicly available knowledge or standard professional practice.

A qualifying project must aim to achieve an advance in science or technology. The company must also face scientific or technological uncertainty – in other words, competent professionals in the field could not easily work out how to achieve the result, or whether it could be achieved at all.

This is broader than many businesses expect. A manufacturer improving an automated line, a construction firm developing a more effective technical method, or a software company building functionality that existing tools cannot provide may all have qualifying activity. The sector is not the deciding factor. The work itself is.

Commercial difficulty alone is not enough. Creating a new website, changing the appearance of a product, adapting an existing system for one customer or making a process cheaper will not qualify unless the work involved genuine technological uncertainty. Similarly, advances in the arts, humanities or social sciences fall outside the relief.

How to claim R&D relief: start with the project

The strongest claims begin with the project story, not a spreadsheet of costs. Before calculating expenditure, identify the specific problem, what the business was trying to achieve and why the solution was not straightforward at the outset.

A clear technical narrative should explain the baseline. What was already known or available? It should then set out the intended advance and the uncertainties encountered. Finally, it should describe the work undertaken to resolve those uncertainties, including testing, iterations, failed approaches and the outcome.

Do not be put off if the project did not succeed. Unsuccessful R&D can still qualify where the company carried out genuine work to resolve an eligible uncertainty. Equally, do not assume every part of a successful development project qualifies. Routine implementation, testing for quality control, commercial roll-out and ordinary maintenance may need to be separated from the qualifying work.

The people who carried out the work are usually best placed to explain it. Directors and technical staff should be involved early, while the project details are still clear. An accountant can turn that information into a properly supported tax claim, but cannot safely invent the technical rationale after the event.

Identify the costs connected to qualifying work

Once the qualifying activity is understood, the next task is to identify the costs directly connected with it. The figures need to be based on business records and a sensible allocation method, particularly where staff divide their time between R&D and routine work.

Eligible expenditure can include staff costs for employees working on the project, such as salaries, employer’s National Insurance contributions and pension contributions. It can also include some payments to externally provided workers, qualifying subcontractor costs, materials used up during R&D, and certain software, cloud computing and data costs.

For businesses with small technical teams, director time can be particularly significant. However, estimates must be realistic and capable of explanation. A director who spent one day a week overseeing development should not be presented as working full-time on R&D simply because the potential tax benefit is attractive.

Some costs require extra care. Capital equipment does not normally form part of an R&D tax relief claim, although capital allowances may be available separately. Marketing, patenting, production after development, customer support and general overheads are also not automatically qualifying costs. Subcontracted work can qualify, but the answer may depend on the contract, who bears the financial risk and which party is entitled to exploit the R&D results.

Keeping project codes, timesheets, meeting notes, test reports, invoices and payroll information will make this exercise far easier. Contemporaneous records are more persuasive than broad recollections prepared close to the filing deadline.

Understand which R&D scheme applies

The UK R&D rules have changed significantly in recent years. For accounting periods beginning on or after 1 April 2024, most companies claim under the merged R&D scheme. This provides a taxable expenditure credit, currently calculated at 20% of qualifying expenditure. The final benefit depends on the company’s tax position, including whether it is profitable or loss-making.

Loss-making companies that meet the R&D intensity test may instead be eligible for Enhanced R&D Intensive Support. Broadly, this is aimed at businesses whose qualifying R&D expenditure represents at least 30% of their total expenditure, although detailed calculations and exclusions apply.

Claims for earlier accounting periods may still fall under the previous SME or RDEC rules. This is one reason not to rely on outdated online guidance or a standard percentage. The right approach depends on your accounting period, company circumstances and the nature of the expenditure.

There are also restrictions around overseas R&D. In many cases, qualifying subcontracted work and externally provided workers must be based in the UK. Limited exceptions can apply where conditions outside the company’s control make UK-based activity impossible, but cost savings or access to cheaper labour will not normally be enough.

Meet the deadlines and filing requirements

An R&D claim is made through the company’s Corporation Tax return. In most cases, the deadline is two years after the end of the accounting period to which the claim relates. Waiting until the deadline can create avoidable pressure, especially when technical evidence and cost records need to be gathered from several people.

Many companies must submit a claim notification form before claiming. This applies particularly where the company has not claimed R&D relief in one of the previous three accounting periods. The notification deadline is generally six months after the end of the relevant accounting period, so it can arrive much sooner than the Corporation Tax filing deadline.

Companies also usually need to complete HMRC’s additional information form before filing the Corporation Tax return containing the claim. This form asks for details of the projects, qualifying costs and the people responsible for the submission. HMRC uses the information to understand the basis of the claim, so generic wording or unsupported figures can increase the risk of questions.

The practical sequence is straightforward, but each stage needs care: review projects, gather evidence, calculate eligible costs, check notification requirements, submit the additional information form and include the claim in the Company Tax Return. Where the claim affects a prior return, amendments and resulting tax calculations must also be handled correctly.

Prepare for questions from HMRC

R&D relief is a legitimate incentive, but it is an area of active HMRC scrutiny. A well-prepared claim should be able to answer simple questions: what was the advance, what uncertainty existed, who worked on it, what did they do and how were the costs calculated?

Avoid claims built around vague phrases such as “we developed an innovative solution”. Innovation in a commercial sense is not the test. Specific, factual descriptions are more useful. For example, explain why existing software architecture could not process a required volume of data, what methods were attempted and why those methods failed or required further development.

A proportionate claim is also a more credible one. A small company may have a modest but worthwhile claim based on a limited number of projects. There is no advantage in stretching routine work into R&D. The relief should support real investment, not create a compliance problem later.

For growing businesses, reviewing R&D activity as part of the year-round accounts process is often more effective than treating it as a last-minute tax exercise. It improves record keeping, helps directors understand where development money is being spent and can inform decisions about future projects.

If your company has been tackling technical challenges, a focused conversation can establish whether there is a claim worth pursuing and what evidence is needed. RK & Co can help turn the detail already within your business into a clear, practical claim that supports both tax efficiency and better planning for the work ahead.

A profitable business can still run short of money. It happens when invoices are paid late, VAT falls due before customers settle their accounts, or a growing workload demands stock, staff or equipment before the income arrives. The best ways to improve cash flow are therefore not simply about spending less. They are about knowing what is due, when it is due and which decisions will protect your working capital.

For many owner-managed businesses, cash-flow pressure builds quietly. The bank balance may look healthy one week, then payroll, supplier payments and tax liabilities land together. With timely records and a practical plan, you can spot that pressure early and make choices from a position of control rather than urgency.

1. Build a rolling cash-flow forecast

A cash-flow forecast turns your expected sales, direct costs, overheads, loan repayments, payroll and tax liabilities into a forward-looking view of your bank position. It should show what is likely to happen weekly or monthly, not just what happened in the last set of accounts.

A 13-week forecast is often especially useful for businesses with regular trading cycles, while a 12-month view helps with wider plans such as recruitment, premises or investment. Neither needs to be complicated, but both must be based on realistic payment dates. An invoice issued in March is not March cash if the customer normally pays in May.

Update the forecast regularly and compare it with the actual bank balance. If there is a shortfall ahead, you have time to chase payments, defer a non-essential purchase, agree terms with a supplier or arrange suitable finance. A forecast is not a prediction carved in stone. It is a decision-making tool that improves as your information improves.

2. Invoice promptly and make payment easy

The longer it takes to raise an invoice, the longer it usually takes to be paid. Send invoices as soon as work is completed or as each agreed stage is reached. Include a clear description of the work, the due date, your bank details and the purchase order number where a customer requires one.

For larger jobs, consider requesting a deposit or billing in stages. Asking a business to fund several months of work before receiving any income can strain cash unnecessarily. Milestone billing shares that pressure more fairly, particularly in construction, consultancy, creative work and project-based services.

Make paying straightforward. Electronic payment details, card payment options where appropriate and clear invoice references reduce avoidable delays. It is also sensible to agree payment terms before work begins. A customer who expects 30 days should not discover a seven-day term only when the invoice arrives.

3. Follow up overdue debtors consistently

Chasing debts need not damage good client relationships. In many cases, an overdue invoice is the result of an internal approval delay, a missing purchase order or a simple oversight. A polite reminder before the due date, followed by a prompt call when payment becomes overdue, is usually more effective than leaving the matter until the balance has become significant.

Create a simple credit-control routine. Review aged debtors every week, allocate responsibility for follow-up and keep a record of conversations and promised payment dates. If a customer repeatedly pays late, reconsider the credit you extend to them. You may need payment upfront, a shorter billing cycle or a credit limit.

Be commercially sensible. A valuable customer experiencing a temporary difficulty may be worth accommodating through an agreed instalment plan. However, do not let goodwill turn into an open-ended source of finance for someone else’s business.

4. Review pricing, margins and customer profitability

More sales do not automatically mean more cash. If prices have not kept pace with wage increases, supplier costs, energy bills or additional delivery costs, every new sale may add pressure rather than relieve it.

Review your pricing at least annually, and more often if costs are moving quickly. Calculate the margin on your main products, services and contracts rather than relying on a broad average. Some customers may be profitable only because their true administration, delivery or rework costs have never been included.

A price increase can feel uncomfortable, but it may be the right step when it reflects the value you provide and protects service quality. Communicate it clearly, give appropriate notice and avoid apologising for running a sustainable business. It can also be more effective to stop offering an unprofitable service than to chase additional turnover to make up for it.

5. Manage stock and supplier terms carefully

Stock ties up cash until it is sold and paid for. Holding too little can lead to missed sales, but holding too much can leave money sitting on shelves and increase the risk of wastage or obsolescence. Review slow-moving lines, buying patterns and minimum order quantities. A modest reduction in surplus stock can release useful working capital.

Supplier terms deserve the same attention as customer terms. Pay suppliers on the agreed date, not automatically as soon as an invoice arrives, unless there is a worthwhile early-payment discount. Reliable communication matters here. If a payment will be late, speak to the supplier early rather than ignoring the invoice.

Try to match the timing of supplier payments to the cash you receive from customers. This will not always be possible, particularly for new businesses or specialist purchases, but even small improvements can smooth difficult periods.

6. Separate tax money from trading cash

VAT, PAYE, corporation tax and self-assessment liabilities can cause a sharp cash-flow shock when they have not been planned for. These amounts are not spare funds, even if they remain in the business bank account for several months.

Set aside a proportion of receipts into a separate savings account as you earn them. The appropriate amount depends on your structure, profitability, VAT position and payroll commitments, so it is worth calculating it rather than guessing. Keep tax dates in your forecast and allow for the fact that some liabilities may fall due during quieter trading periods.

Good bookkeeping makes this far easier. Up-to-date records show the VAT position, likely tax exposure and unpaid invoices before deadlines approach. They also give you better information when deciding whether a dividend, purchase or new hire is affordable.

7. Cut avoidable costs without cutting capability

Cost control is not about cancelling every subscription or choosing the cheapest supplier. The aim is to remove spending that no longer supports sales, service or efficient operations.

Review regular direct debits, software licences, insurance, phone contracts, vehicle costs and outsourced services. Ask whether each cost is used, whether it is still competitively priced and whether two systems are doing the same job. Small recurring amounts can become substantial over a year.

Take care not to cut costs that protect revenue or save staff time. Reducing bookkeeping support, for example, may appear to save money but can lead to late invoicing, poor debt collection and weaker decisions. Focus on value, not simply expenditure.

8. Use finance for the right purpose

Borrowing can be a sensible part of a cashflow plan, but it should fit the need. A short-term facility may help bridge a known gap between paying suppliers and collecting customer invoices. Asset finance may be more appropriate for equipment that will contribute to the business over several years.

Using long-term borrowing to cover repeated trading losses is different. It can postpone a difficult conversation about pricing, margins or overheads without fixing the cause. Before taking finance, model the repayments in your forecast and consider the impact if sales arrive later than expected.

Best ways to improve cash flow: make it a regular management habit

Cash flow improves when it is reviewed routinely, not only when the bank balance becomes uncomfortable. Set aside time each month to update your forecast, check overdue invoices, review upcoming tax payments and compare actual results with the plan. A short, disciplined review can prevent a much larger problem later.

For growing businesses, this is where an adviser can add real value. RK & Co helps business owners turn bookkeeping and accounts information into practical actions, from preparing cash-flow forecasts and budgets to identifying pressure on margins and planning tax liabilities. Clear figures give you the confidence to act sooner.

The next useful step is simple: look ahead at the next 90 days of money in and money out. Once you can see the pinch points, you can start making calm, informed choices that support the business you are working hard to build.