Business Expenses: What Can Self-Employed Claim on Their Tax Return?

As a self-employed individual, filing your Self Assessment tax return can feel daunting. One key to reducing your tax bill is claiming allowable business expenses. At Talwar Accountant, we help clients maximize their claims while staying HMRC-compliant. Here’s what you need to know for 2024/25.

Why Claiming Expenses Matters

Allowable expenses are costs incurred solely for your business. Subtracting these from your income lowers your taxable profit, reducing your Income Tax and National Insurance. Proper record-keeping is essential for a smooth tax return and to support claims if HMRC queries them.

The “Wholly and Exclusively” Rule

Expenses must be incurred “wholly and exclusively” for your business. For example, if you work from home, you can claim a portion of your internet bill based on business use, but personal expenses like your Netflix subscription are off-limits.

Common Allowable Expenses

• Office Costs: Rent for business premises, or a proportion of home costs (e.g., utilities, council tax) if you work from home. Stationery, business cards, and business phone/internet costs also qualify.
• Travel: Business mileage (e.g., 45p per mile for cars up to 10,000 miles), public transport, or accommodation/meals for business trips. Private use must be excluded.
• Equipment: Small items (e.g., laptops, software) as revenue expenses, or capital allowances for larger assets (e.g., machinery). Depreciation isn’t tax-deductible.
• Clothing: Uniforms or protective gear (e.g., safety boots) but not everyday clothes.
• Training: Courses to maintain/improve business skills or professional subscriptions.
• Marketing: Website costs, social media ads, or printed flyers.
• Financial/Legal: Business bank charges, loan interest, accountant fees, or solicitor costs for business purposes.
  
  Simplified Expenses: For simplicity, use flat rates for home working (£6/week) or mileage.
  

Example: Sarah, a freelance graphic designer, claims 20% of her home utilities for her office, mileage for client meetings, and her laptop as a capital allowance, saving hundreds on her tax bill.

Non-Allowable Expenses

You can’t claim personal expenses (e.g., personal phone bills), fines (e.g., parking tickets), or client entertainment (e.g., dinners), though staff entertainment (e.g., Christmas parties, up to £150/head) may qualify.

Keep Records

Store receipts, invoices, and digital records (e.g., via software like QuickBooks) to back your claims. Good records simplify tax returns and protect you during HMRC audits.

Need Help?

Expenses can be tricky. Our expert advisors at Talwar Accountant ensure you claim every allowable cost while staying compliant. Book a free consultation to optimize your 2024/25 tax return!

Kind regards,
Jagdeep Singh ATT
Tax Advisor