Maximizing Your Deductions: A Guide to Self-Employed Expenses

Many people in the UK will have started new businesses this year, entering the world of self-employment.  Though it’s an exciting time, filling out your tax return and paying a large amount to HMRC is not so fun. Here is guide to self-employed expenses.

Claiming expenses can help reduce your tax bill and increase your take-home pay, but it’s important to know which expenses are allowable and which are not. Don’t just try and wing it, proper research is advisable, especially if completing the returns yourself.

In this guide, we will look at common expenses you can claim as a self-employed individual. If you are unsure about an expense or filling out a tax return, contact an accountant or visit Go Self-Employed for indepth articles and guides.

1. Office expenses: If you work from home, you can claim a portion of your household bills, such as gas, electricity, and water. The amount you can claim depends on the proportion of your home that is used for business purposes. You can also claim for office equipment, such as a computer, printer, and stationery.
   
2. Travel expenses: You can claim for business-related travel, including mileage or public transport costs. You cannot claim for travel between your home and place of work, but you can claim for travel between different work locations. The current rate is 45p per mile for the first 10,000 business miles, then 25p after that.
   
3. Accommodation expenses: If you need to stay away from home for business purposes, you can claim for accommodation costs, including hotels, bed and breakfasts, and rented accommodation.
   
4. Advertising and marketing expenses: You can claim for advertising and marketing costs, including the cost of creating and printing promotional materials, running online ads, and attending trade shows.
   
5. Professional fees and subscriptions: You can claim for fees and subscriptions to professional bodies, such as the Chartered Institute of Management Accountants or the National Union of Journalists.
   
6. Bank and credit card charges: You can claim for bank and credit card charges that are directly related to your business.
   
7. Insurance: You can claim for insurance costs, such as public liability insurance or professional indemnity insurance.
   Stock and raw materials: You can claim for the cost of stock and raw materials that are used in your business.
   
8. Training and development: You can claim for the cost of training and development courses that are directly related to your business – a great reason to invest in yourself as your business develops.

It’s important to keep accurate records of all your expenses throughout the year, so you can claim the correct amount on your tax return. HM Revenue & Customs (HMRC) may request to see your records to verify your expenses, so it’s essential to keep them up to date.

It’s also worth noting that there are some expenses you cannot claim, such as non-business expenses, personal expenses, and any expenses that are not wholly and exclusively for business purposes.

In conclusion, there are a variety of expenses that you can claim to help reduce your tax bill and increase your take-home pay. By keeping accurate records of your expenses and understanding which expenses are allowable, you can make the most of your self-employment status and ensure you’re paying the correct amount of tax.