Allowable Expenses for Self-Assessment

It’s getting near the deadline for Self-Assessment and it’s important to get your figures right so that you’re not paying too much tax, or too little, as this could come back to haunt you later on.

There are a number of allowable business expenses for the self-employed, that is, expenses that you can claim back against your tax liability. It’s important to know what these are as there are a number of expenses that you are not allowed to claim back. The following are expenses that are usually tax deductible, that is, expenses that HMRC will allow you to claim back.

Office Expenses - This includes things like stationary, printer ink, business software, phone and internet bills, etc. If you have a business premises you can also claim rent, utility bills, insurance and security, but you cannot claim for buying or building your premises. If you work from home then you can claim partial expenses on utilities, but you need to work out what that value is based on usage and the rooms in your house.

Travel - If you travel by car, you can claim business related car or van costs including insurance, fuel, tolls such as ULEZ, servicing etc, but only if they are exclusively for the business. You can also claim other business travel by train, plane, bus, etc. but only if it’s to a place other than your regular place of work. You cannot claim for your daily commute. If you are away from home on business then you can claim ‘reasonable’ food and drink expenses, but otherwise you cannot claim for any other food or drink, this includes client lunches and other entertaining.

Stock and materials - You can claim for the cost of your stock, or any materials you use to build or create, and any other direct costs that result from production of goods.

Legal and financial costs - Bookkeeping and accounting costs, legal fees, surveyors, etc are all allowable expenses as are bank charges. You can also claim back any business insurance costs you take out. You cannot claim back any fines for breaking the law such as parking tickets.

Marketing - You can claim back marketing and advertising costs, which includes websites, leaflets and samples.

Clothing - This is a much contested area but HMRC are quite clear about clothing. If you wear a uniform or have to buy necessary protective clothing then you can claim it back. if you’re an entertainer and wear a costume then you can claim the cost of this back. However, you cannot claim back any everyday clothing, even if you wear it exclusively for work. So if you wear a suit to interviews or client meetings, this is not an allowable expense.

Subscriptions - Professional memberships to trade bodies are deductible if they are relevant to your business, as are subscriptions to trade magazines or journals.

We hope this helps and if you need any advice just give us a shout. There are two important things to remember with any kind of expense claims for tax purposes. Firstly, is the expense ‘wholly and exclusively’ for your business. This is the test HMRC use and they are strict on this for all expenses. Secondly, if in doubt, check the HMRC website for information. Most things are covered there and that is the information you should trust.