According to data published by the House of Commons Library, since 2011 the number of self-employed workers in the economy has grown. In fact, this trend has been evident in the last year alone, with 97,000 more people describing themselves as self-employed between October and December 2023 compared to 2022.
If you are part of the growing self-employed contingent in the economy, you are probably familiar with the self-assessment process. As a self-employed person, you are required to pay Income Tax on your trading profits. This figure is calculated by deducting your operating costs from your revenue and is normally reported to HMRC through a self-assessment form.
One way you can potentially reduce your Income Tax bill is to make sure you correctly claim your expenses each year. However, you may not know exactly what you are allowed to expense as a business owner or self-employed worker.
Here are seven key tax-deductible expenses that you could claim in your self-assessment.
1. Office expenses
Office equipment is essential for the work of many self-employed people, and you can expense many of these types of outgoings.
You can expense money paid for items that you would usually use for less than a year. Examples include:
- Stationery
- Printer cartridges
- Postage
- Office bills like phone, mobile and internet
- Software that requires regular payments to renew your license, or that you will use for less than two years.
In addition, if you use cash basis accounting, you can claim more evergreen office expenses such as computers and printers.
If you use traditional accounting, you will likely have to claim these expenses as capital allowances. It could be worth talking to a professional about the benefits of claiming expenses as a capital allowance.
2. Travel
You can claim travel costs such as plane, train and bus tickets, taxis and vehicle hire as allowable expenses.
You can also claim for the costs associated with running a vehicle such as:
- Insurance
- Low Emission Zone charges
- Servicing
- Repairs
- Parking.
You cannot claim for fines such as speeding or parking tickets, nor expenses related to commuting to and from your place of work.
While travelling for business, you can also claim for the cost of your accommodation and meals.
You are also able to claim when you purchase a vehicle for your business. However, how you claim this expense varies based on the accounting method you use.
If using traditional accounting, you can claim the cost of all vehicles as a capital allowance.
If you use cash basis accounting, the cost of a car can be claimed as a capital allowance. However, other vehicles such as vans are classed as an allowable expense.
3. Staff costs
If you have employees working for you, then you can claim staff costs on your self-assessment form.
Examples of staff costs you can claim include salaries, pension contributions, bonuses, National Insurance contributions and training.
If you pay for training courses for yourself, there are some rules around what you can claim as an allowable expense. You can claim for training that improves the skills and knowledge you use in your current business. However, you cannot claim on training that helps you start a new business or expand into new areas of business.
4. Marketing and subscriptions
Marketing costs can be claimed as an allowable expense. Examples of this kind of marketing expense include:
- Advertising across all mediums
- Website costs
- Marketing agency fees
- Newsletter costs
- Mailshots.
You can also claim membership fees for trade bodies and professional membership organisations, as well as subscriptions to trade or professional journals.
5. Business premises
If you rent an office or other similar workspace for your business, you can claim for related expenses such as:
- Rent
- Maintenance
- Utility bills
- Property insurance
- Security.
However, you cannot claim expenses or allowances for buying building premises, or for construction costs if you build your own place of work.
If you work from home, you can claim some of your home utility bills. You need to calculate what proportion of your home is used for business purposes, and for what proportion of the month.
Alternatively, if you work from home at least 25 hours a month, you can use simplified expenses, which is a flat monthly rate calculated by the government.
6. Legal and financial costs
If you enlist the services of professionals such as accountants, solicitors and surveyors, you can claim their fees as allowable expenses.
However, you cannot claim the legal costs of buying property and machinery as an allowable expense. If you use traditional accounting, these can be claimed as capital allowances.
It is also important to note that you cannot claim any fines for breaking the law.
You can also claim for interest on loans, overdraft fees and other costs of borrowing. If you use cash basis accounting, this is up to a limit of £500.
If you use traditional accounting, you can also claim for bad debt.
7. Business insurance
There are various forms of protection available for businesses and self-employed individuals, all of which you can claim. Examples of types of business insurance include:
- Public liability insurance
- Critical illness cover
- Professional indemnity insurance
- Employer’s liability insurance.
If you are unsure about what types of business insurance could benefit you, then speaking to a financial planner could help.
Get in touch
If you are self-employed and feel you could benefit from some professional financial support, then please do get in touch with us at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
The Financial Conduct Authority does not regulate tax planning.
