Claiming Expenses in Your Annual Tax Return: A Guide for the Self-Employed
As a self-employed individual, claiming allowable expenses is key to reducing your tax bill. Understanding what you can claim ensures compliance with HMRC while maximizing deductions. Here’s a breakdown of common expenses you can include in your tax return to lower your taxable income.
1. Office and Workspace Costs
Whether you work from home or rent an office, a portion of your workspace expenses can be claimed:
Home Office: Claim a percentage of household costs like rent, utilities, and internet.
Office Supplies: Items like stationery, printers, computers, and software are deductible.
2. Travel and Mileage
Business-related travel is fully deductible:
Business Travel: Claim train, bus, taxi fares, or airfare for meetings or conferences.
Mileage: Claim 45p per mile for the first 10,000 miles and 25p thereafter if you use your car for work.
Parking and Tolls: Parking costs and tolls can be claimed, but fines cannot.
Tip: Keep a detailed record of business trips and mileage.
3. Marketing and Advertising
Advertising your business is a deductible expense:
Online Advertising: Costs for Google Ads, Facebook Ads, and printed materials can be claimed.
Website: Expenses for creating, hosting, and maintaining a website, including domain names, are allowable.
4. Professional Fees
Professional services are deductible:
Accountancy and Legal Fees: Fees for accounting, bookkeeping, or legal advice related to your business are allowable, but fines or penalties (e.g., late filings) are not.
5. Stock, Materials, and Goods for Resale
The cost of goods or materials used in your business is deductible:
Stock: Purchases of raw materials or items for resale are claimable.
Direct Costs: Packaging, shipping, and storage expenses are also deductible.
6. Insurance
Business-related insurance premiums are deductible:
Types of Insurance: This includes public liability, professional indemnity, and employer’s liability insurance (if you have employees).
7. Subscriptions and Training
Relevant subscriptions and training costs are deductible:
Subscriptions: Professional organization fees and industry magazines can be claimed.
Training: Costs of courses that enhance existing skills related to your business are allowable, but training for a new profession is not.
8. Utilities and Telephone Costs
Claim business-related portions of your phone and utility bills:
Telephone, Utilities and Internet: Claim the percentage used for work.
9. Rent and Leasing
Leasing costs for premises or equipment are deductible.
10. Bank Charges and Loan Interest
You can claim business-related banking fees and loan interest.
Conclusion: Maximize Your Deductions
Accurately claiming expenses reduces your tax bill and helps keep more of your income. Proper documentation is key to staying compliant with HMRC and benefiting from available tax relief.