twenty third Sep 2025
Studying Time: 12 minutes
Freelancers have to finish a Self Evaluation tax return by January thirty first yearly. This contains itemizing all of your revenue for the tax 12 months – and your allowable bills. However what are you able to embody as a reliable expense -and what’s going to HMRC refuse?
Let’s take a look at what you possibly can – and might’t – embody as an allowable expense in your Self Evaluation. This information is for sole merchants – taxes for Restricted Firms, PLCs, and charities are completely different.
The Buying and selling Allowance
The Buying and selling Allowance is ideal when you flip over lower than £1,000 a 12 months together with your self-employment. For instance, when you occassionally babysit or do some backyard chores, or in case you have a small enterprise that’s simply getting began.
You don’t should register as self-employed with HMRC when you flip over £1,000 or much less in a tax 12 months. Nonetheless, you possibly can’t declare bills when you do it this manner. So, when you flip over £1,000 however your bills value £500, you possibly can’t write off that £500 to maximise your income. Should you assume you’ll flip over greater than £1,000, otherwise you wish to offset your bills in opposition to your revenue, it’s best to register as self-employed with HMRC.
Wholly and Completely Defined
Earlier than you begin throwing the whole lot on your small business account as an expense in your Self Evaluation, maintain up! It’s possible you’ll have to show to the tax man that your expense was incurred ‘wholly and completely’ within the line of labor.
For instance, you possibly can’t e book a two-week vacation to attend a one-day convention and declare the whole value. You possibly can, nonetheless, declare the journey required to get to the convention, and the resort one evening earlier than (and even after, relying on the space from residence and journey necessities). The remainder of your lodging and journey bills – i.e., your vacation – should come out of your individual pocket.
Private Use Objects Used for Enterprise
Generally, particularly once you’re beginning out, you’ll use private stuff within the line of enterprise. You may use your cell phone, for instance, or your laptop computer, once you’re first working your freelance enterprise.
You possibly can’t declare the total invoice – however you possibly can work out the affordable portion of the associated fee that’s used within the line of enterprise. For instance, you can work out what number of minutes you used out of your cell phone month-to-month tariff for enterprise functions and use that as a proportionate quantity to assert.
Simplified vs Precise Bills
Should you run a low-overhead enterprise, your prices could are available in at beneath £1000 a 12 months. If so, you possibly can declare utilizing ‘simplified bills’ for some issues. This contains the enterprise use of automobiles, value of working from residence, and dwelling in your small business premises. Every thing else must be labored out as precise prices.
Simplified bills saves you a giant headache! You employ flat fee bills set by HMRC to make approximated expense claims, relatively than including up each single mile you’ve travelled within the 12 months (for instance). Try the Gov.uk web site for extra particulars about simplified bills.
The flat fee for working from residence, for instance, is £10 per thirty days for between 25-50 hours a month, £18 for 51-100 hours, and £26 for 101+ hours a month. This will internet you greater than figuring out precise bills (see under).
Conventional vs Money Foundation Accounting
Determine if you wish to observe the standard or money foundation accounting choices. Conventional accounting is the place you rely the invoices despatched out that month – not essentially the cash obtained. This may be helpful once you’re establishing in case you have a whole lot of stock or lengthy cost phrases, as you’ll be capable of offset unpaid invoices.
Money foundation accounting is usually easier for sole merchants to make use of, although. It solely takes under consideration the cash you’ve truly obtained in that tax 12 months, and the precise bills incurred.
Whichever foundation you employ, ensure you preserve ALL RECEIPTS for not less than seven years. Additionally, you will must be ready for Making Tax Digital, which begins rolling out from April 2026 for these with a turnover of £50,000 or above. So, take into account getting a enterprise checking account with built-in HMRC-approved MTD software program like Freeagent or Xero. This may make the quarterly returns required a lot simpler.
Working from Residence vs Renting Workplace Area
Many freelancers make money working from home – both for value causes or private desire. Others prefer to hire a desk in an workplace – or have a membership to versatile co-working areas for the times that the identical 4 partitions drive them crazy!
You possibly can declare some prices incurred by working from residence as an allowable expense in your tax return. You possibly can’t, sadly, expense your total Council Tax or electrical energy payments – however you possibly can expense a few of them.
Rooms you possibly can embody
Use the variety of rooms in your house for the calculations. You possibly can embody dwelling areas, bedrooms, kitchens, workplace areas, even garages when you work in it. You possibly can’t use lobbies, porches, hallways (together with mezzanine areas) – however in case you have a backyard room that’s in your primary energy provide, you possibly can embody that.
Depend what number of rooms you’ve gotten in your house. Divide your month-to-month payments whole by the variety of rooms you’ve received. Say your payments come to £350 and you’ve got 5 rooms – that’s £70 a room. Then, take a look at the period of time you employ every room for work.
Let’s say you’re employed 100 hours a month. You spend 50 hours in the lounge (room value £70 x 50% time = £35), 30 hours within the kitchen (£70 x 30% = £21), and 20 hours in your backyard room (£70 x 20% = £14). So, that’s £35 + £21 + 14 = £70 bills allowed.
Why not use one room?
Even in case you have a devoted residence workplace, ensure you use it for private use one way or the other. This may very well be storing private gadgets in it or generally watching a movie in your laptop computer in there. Why?
Capital Features Tax! Should you promote your private home and have used just one room completely for work, you open your self as much as a CGT invoice. That’s why it’s higher to work out proportion time relatively than only one room’s use!
Payments you possibly can expense
Calculate each invoice: hire or mortgage curiosity (not whole mortgage repayments), electrical energy, fuel, Council Tax, water. Your phone and broadband payments will be labored out on a proportion utilization relatively than room calculations, when you don’t have devoted enterprise telephones and broadband.
Workplace Tools and Furnishings
Do you employ a selected desk, chair, or submitting cupboard? Have you ever bought bulbs for the lamp in your desk? Maybe you’ve received a noticeboard on the wall in your vital paperwork and reminders.
Something that you just purchase that’s wholly and completely for your small business will be claimed. If there’s any private use – akin to an workplace chair you sit on to look at YouTube in your lunch break – low cost the proportion of time you employ it for private actions in opposition to the associated fee.
Energy cables, surge protectors, monitor risers: the whole lot and something you employ to equip your workplace area will be included.
This additionally contains enterprise bills akin to postage, envelopes, printer ink, paper, and stationery. You can even embody software program purchases – together with month-to-month subscriptions to issues like Dropbox or Workplace 365.
Computer systems and Know-how
Do you employ a desk with a PC and displays? A laptop computer raised up on a stand? A particular cell phone for work?
You possibly can low cost all these prices as an allowable expense! Nonetheless, you need to be certain it counts as an allowable expense relatively than a capital expenditure. An allowable expense is one thing you’ll use for lower than two years – akin to hire, payments, and stationery. Should you use money foundation accounting, computer systems are allowable bills, too. Nonetheless, when you use conventional accounting, tools is a capital allowance.
As with the opposite issues, when you use your pc or cell phone for private use, it’s a must to declare proportionately.
Contractor Bills and Skilled Charges
“You need to spend cash to become profitable” is admittedly very true in the case of launching and sustaining a self-employed enterprise.
Among the best investments you may make in your small business is getting the appropriate individuals to do every job for you. Whereas many self-employed individuals operating their very own enterprise are concurrently accountant, marketer, gross sales particular person, doer-of-the-actual-thing, social media govt – it’s truly higher to rent individuals when you can.
You possibly can offset the price of skilled charges, akin to accountants and solicitors, as an allowable expense. Utilizing an expert will prevent a LOT of time and provide help to keep away from probably large (and dear) complications sooner or later.
Should you want a serving to hand to assist run a stand at an exhibition, otherwise you wish to pay somebody to run your social media, these prices fall beneath allowable bills, too. That is completely different to having an worker: you could use contractors right here, relatively than rent somebody on payroll. If you’d like an worker, you’ll must be a Restricted Firm and make employer Nationwide Insurance coverage and pension contributions. Utilizing contractors means you pay the set price on the bill with out the above prices.
Banking Charges
Sole merchants don’t HAVE to have a separate checking account – but it surely’s advisable to set one up, particularly with Making Tax Digital across the nook, which might contain direct reporting out of your checking account. You should use a present account, relatively than a enterprise account, which regularly means no banking fees.
Nonetheless, if you’d like entry to enterprise bank cards, loans, and even to work with public organisations, you’ll want a enterprise account. These come at a price – however you possibly can offset month-to-month charges as an allowable expense. You can even declare overdraft fees, bank card curiosity funds, leasing prices, and foreign money conversion charges.
These utilizing conventional accounting may also declare for dangerous money owed. That is when a buyer hasn’t paid you. You’ll have to point out you’ve tried to recuperate the cash first, but when there’s no luck (akin to your buyer has gone bankrupt) you possibly can write this off in opposition to your income.
Insurance coverage Counts, Too
As a enterprise proprietor, it’s crucial to have enterprise insurance coverage. On the very minimal, skilled indemnity insurance coverage helps defend you in opposition to claims from purchasers. Should you run exhibition stands or individuals go to your premises, you’ll additionally want public legal responsibility insurance coverage by regulation. These prices all rely for allowable bills.
Should you’re a member of an expert organisation or union, you possibly can usually embody skilled indemnity insurance coverage in your membership, so it’s value checking the fantastic print earlier than you’re taking out a separate coverage.
Advertising and marketing Prices
You possibly can’t run a enterprise when you don’t shout about it! Every thing you do to market your small business can rely in the direction of allowable bills.
So, once you arrange your web site, your internet hosting and area prices are allowable bills. Your flyers, enterprise playing cards, and on-line pay-per-click adverts are all counted, too! If in case you have a product to promote, sending free samples to reviewers is classed as advertising.
Attending an occasion? Get branded gadgets from Vistaprint like pens, stress balls, keyrings, and the whole lot else you have to give away as tempting freebies – all of them rely as a reliable advertising expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to checklist your small business in a listing, and your junk mail prices.
Alas, taking potential purchasers out for dinner doesn’t rely as advertising. ‘Consumer leisure’ isn’t an allowable expense. If, nonetheless, you meet with somebody to get their recommendation on a enterprise facet and purchase them lunch as an alternative of paying for his or her consulting time, this may be expensed as it’s a cost in type. You can even cost subsistence for drinks and meals to an affordable quantity in case you are working away out of your traditional administrative center, akin to if it’s a must to go to a unique metropolis for a convention.
Clothes and Uniforms
Do you wish to get t-shirts together with your emblem on? What about branded hoodies from Vistaprint? Maybe you wish to put on a wise uniform that’s solely used in your line of labor, akin to when you run your individual cleansing enterprise. Or, when you want particular clothes akin to steel-capped security boots, these will be claimed.
You possibly can declare branded clothes as a advertising expense. You can even declare uniform prices – and you may declare laundry prices for uniforms, too.
You possibly can’t, nonetheless, declare for garments that you just’d put on usually at residence. Or perhaps a enterprise go well with for conferences when you’re normally in denims and a hoodie! The rule with clothes may be very a lot that it both has to rely as advertising (i.e., branded) OR used as a uniform ‘wholly and completely’ for your small business.
The one exception to claiming for clothes that’s not task- or uniform-specific is for performers like actors. They usually want to purchase garments for auditions or their very own performances, so if it’s a costume it’s an allowable expense.
Continued Training
That is an fascinating one. You possibly can embody issues like commerce magazines in your allowable bills, plus membership to recognised trade organisations in the event that they’re associated to your small business.
Additional training additionally counts as an allowable expense if it builds on a ability you have already got for your small business. For instance, when you’re a contract occasions producer, your job is generally advertising. So, you can declare for a advertising diploma or perhaps a full CIMA qualification. Nonetheless, you couldn’t resolve you wished to vary careers as a bricklayer and rely that course as an allowable expense.
This nonetheless leaves your alternative base fairly broad, particularly when you’re a sole dealer. For instance, let’s say you’re a contract author – a number of writers profit from studying use graphic design software program. So, an internet Photoshop course may rely. Or, any business-related course akin to a bookkeeping qualification will even qualify for any sole dealer, as they want these abilities to construct and keep their enterprise.
Attending commerce conferences and occasions additionally counts as continued skilled training – so ensure you put your ticket prices down as an allowable expense, too!
Journey and Autos
Should you commute usually to an workplace, you possibly can’t declare these prices as an expense. Every thing else although is a superb huge tick within the Sure You Can Declare column!
Practice, bus, even air fares all rely when you’re travelling wholly and completely for enterprise functions. Should you purchase a automobile solely for your small business, you possibly can rely the acquisition as a capital expense (or the lease charges as an allowable expense). All MOT, insurance coverage, servicing, repairs, parking, and gasoline is allowed, too.
Should you use your private automotive to journey for work, you possibly can declare mileage prices. That is based mostly on the HMRC mileage charges which is about pretty excessive so ought to cowl gasoline prices in addition to put on and tear incurred.
Different Bills to Take into account
There are many different prices that MIGHT be an allowable expense. It’s good to ask your self if it’s used ‘wholly and completely’ for enterprise use. Listed here are some examples you might come throughout – all of it will depend on your line of labor and whether or not you employ one thing just for your small business with no private use.
Subscriptions
Commerce journals are a transparent allowable expense, as is subscription-based software program like GSuite or Dropbox. However do you know you can declare for different issues – together with shopping for books and newspapers, and even subscriptions like Netflix and Spotify?!
It’s good to show an actual enterprise use. Enjoying Netflix when you’re working for ‘workplace leisure’ doesn’t rely! Nonetheless, in case you are – for instance – an actor or budding movie director, you can justify the subscription as a analysis device. The identical goes for Spotify when you’re a musician or podcaster, and even issues like Twitch when you’re a gamer making an attempt to make an revenue from streaming.
Gymnasium prices
Now, 99.99% of the time this received’t wash with HMRC. HOWEVER, in case you are – for instance – a sports activities mannequin, it’s your job to maintain match and keep trying wholesome. Should you’re a private coach, health club tools counts as an allowable expense, too.
Haircuts and wonder remedies
In case your job relies primarily in your look – i.e., you’re a mannequin or an actor – you can attempt claiming prices for hair and wonder remedies. You’ll want to have the ability to show, if questioned, that the expense was a reliable enterprise declare although!
Accommodations
Travelling wherever for enterprise conferences or occasions usually means going a good distance from residence. You’re entitled to assert your lodging value as an allowable expense in case your journey is 100% enterprise associated. Should you select to increase your journey, you possibly can solely declare the nights that had been required in your assembly.
In a single day meals
Like motels, when you’re travelling away out of your major administrative center for an in a single day or prolonged journey, you possibly can account for in a single day meals. This doesn’t imply going all-out and getting a steak dinner with champagne although – the associated fee should appear affordable.
Pensions
We will’t stress this sufficient: contribute to your pension! Self-employed individuals usually put themselves final, particularly their older-way-in-the-future selves. Begin squirrelling away cash into your pension each month – even when it’s a small quantity.
Whereas it’s not an allowable expense on the tax return, there’s one other part that asks you to declare your pension contributions. It’s vital you embody your whole annual contributions right here, because it means you’ll benefit from the tax aid on provide – which means free cash in your pension pot!
Guard canines
One of many funniest claims we’ve heard of being accepted by HMRC is a guard canine. You’re entitled to assert for safety prices to your small business premises – in case your canine is taken into account a guard canine, technically you possibly can declare for his or her buy, maintenance, vet payments and meals! Nonetheless, all the time keep in mind that HMRC may audit you at any time – so when you’re considering of itemizing your chihuahua as a guard canine, perhaps assume twice…
