I'm self-employed - what expenses can I claim?
If you're self-employed, you'll be earning money and paying for things.
This article covers the expenses that you can claim when you're self-employed. You'll be marking these as "business expenses" in untied.
(Note: If you have a rental property, check out the article on what you can claim for a rental property here.)
untied tip if your expenses are less than £1,000
Expenses are only worth tracking if they are greater than £1,000 a year ... the reason is that you're allowed to claim up to £1,000 as an allowance without needing paperwork. If you're an untied user then this is claimed automatically.
There is one thing to note - you can't create a loss by doing so ... it means that if you're earning £5,000 you can claim £1,000. If you're earning £800, you can claim £800.
What can you claim
In general, you can claim the costs of running your business. It will include things like:
- things that you buy to sell on
- office or factory space
- costs of people you pay
- travel costs when you're on business (but not the costs of getting to or from a regular place of work)
- websites, stationery
- commissions that you pay
- finance costs including business loans and charges that you may pay for accepting credit cards
- car, motorbike, and bicycle costs (see below)
- costs of working from home (see below)
- office equipment including computers
- cost of mobile phones
What about VAT?
Larger businesses get the VAT back on things they buy. They also have to charge VAT to their customers. This means they'd normally be paying VAT to HMRC.
Assuming you are not VAT registered (you won't need to be unless your sales hit £85,000), you can claim the full cost you've paid out including VAT.
Mobile phone bills
If you have a separate phone for your business, then the phone and the bills will relate to that activity.
But what if it's just one all inclusive contract that you use for business and personal purposes? You can claim the business share. If you are constantly on your phone for business reasons, and the personal use is incidental then you may even claim the full amount. This might apply for instance if you're a self-employed driver using the phone for navigation and picking up work via an app.
Vans, cars, motorbikes, and bicycles
If you have a vehicle that is used in your business - you can claim expenses for this. Most self-employed people will be using their own private vehicle for business purposes (untied tip - make sure that your insurance covers you!). In this case, you can claim the business proportion of the costs (noting that there are special rules for cars) - or claim for business mileage. Most users find that a mileage rate is the easiest way to claim for these costs! We've linked to other helpful articles that provide more information about this.
Working from home
If you work from home, you can claim either a business proportion of your costs of electricity, gas, internet, etc. Or you can claim a fixed rate. If you're on untied Pro, we'll help you do this with a quick wizard.
What can't I claim
There are always exceptions. For example, you can't claim for:
- Private expenses
- Everyday clothes
- Self-assessment tax payments to HMRC
- Self-assessment penalties and interest (but untied helps you avoid these!)
- Other fines and penalties (like parking fines)
- Commuting mileage - such as between your home and the first job of the day, if you work a delivery round
We are often asked about food and clothing.
You can't claim your lunch or tea/coffees during the day. (If you are out travelling away from home eg at a conference and have to buy food then that would be reasonably accepted as claimable.)
You also can't claim entertainment outside your business such as taking customers out for dinner.
If you have employees and put on parties that they can all come to, then you can deduct the cost. You'll want to keep it to under £150 per head for the year.
If in doubt, you can ask untied (look for the dropdown tag) for information, or check with HMRC.
You can't claim for everyday clothing. If you need to buy a uniform or branded clothing then this will be allowable as a business expense. You can also claim for PPE specific to your work.