Self employed expenses

What to claim as business expense when you work for yourself

When you’re self employed expenses are used to reduce your taxable profit and therefore reduce the tax you pay. Your expenses get entered on to your self assessment tax return.

In order to arrive at your taxable profit the basic method is to start with your income (or turnover) and deduct from this the relevant self employed business expenses that you have incurred during the tax year.

What can I deduct as relevant business expenses in self employment?

The general rule that HM Revenue uses to inform people of the expenses they can claim is that they must be “Wholly and exclusively” incurred for the purpose of the self employed business being carried out. This means that only costs that relate totally to the pursuit of your trade can be deducted as a taxable expense when calculating profit. This doesn’t mean that you can only claim for something if it used only in the business (such as your mobile phone which is bound to have private use) it means you can only claim for the business element of your mobile phone bills

some examples of self employed allowable expenses

  • The purchase of stock
  • Motor expenses incurred in the trade (it may also be worth thinking about claiming mileage if you are self employed)
  • Rent, rates and mortgage interest (if you use a room in your office you need to think about claiming as use of home allowance)
  • Telephone calls used for business
  • Printing and stationery
  • Advertising
  • Accountancy fees (that means us!)
  • Wages paid to employees.

Expenses that aren’t tax deductible

  • Client entertaining
  • Personal items such as clothing or food (although there are some exceptions such as protective clothing or uniforms and food consumed whilst working away from home
  • National insurance contributions
  • Wages paid to yourself (these are classed as drawings and are not allowable)
  • Travel between home and workplace

How Taxdoctor can help

Here at Taxdoctor we provide a unique fixed fee self assessment tax return preparation service. If you're not too keen to take on the tax system on your own then let us help! We have particular experience in dealing with landlords, those dealt with under the CIS scheme and the more general self employed individuals.