Self-employed expenses: what can you claim?
- 01 Oct 2018
When you’re self-employed, your expenditure and your finances are entirely your responsibility. You need to be savvy when considering your business costs, and it seems that the bigger your business grows, the more you seem to spend.
Luckily, one of the perks of working for yourself is the ability to claim back some of the costs of legitimate business expenses. Of course, there’s the obvious - mileage and insurances for example, but there may well be some lesser known business expenses you’ve missed out on. To show you just what is possible to claim, here are 11 business costs you can expense — so get saving those receipts and invoices.
Setting up on social media is free, but using it as a channel to advertise your services or to promote yourself can be costly. Though this can be one of your greatest assets, it can quickly drain your bank balance.
If you’re using social platforms solely for the purpose of your business, keep your invoices and claim the cost as an allowable business expense.
Sadly, this one’s only applicable if you are required to work somewhere which could potentially be hazardous (if you’re a builder, for example). Anything which is purchased exclusively for your health and wellbeing whilst at work is good to add on to your tax return. This includes the likes of hardhats, steel toe boots, but could even stretch to sunscreen and sunglasses if you’re working outside.
Top tip: Don’t automatically write off a business cost just because you’re unsure - you never know!
Training and courses
When you’re self-employed, your skills are the best way to market yourself. If you think it would be beneficial to the running of your business to learn something new or brush up on something you’ve not put into practice for a while, you can claim the cost of your training or education as a business expense.
Top tip: Anything which is bought ‘wholly and exclusively’ for your work can be claimed by HMRC’s standards.
Gifts for employees and clients
If you work for yourself, there’s actually an allowance known as a ‘trivial benefit’, which allows you to give small gifts (under £50) to employees and directors. There’s no limit on the number of ‘benefits’ you provide, as long as they don’t exceed £50 at a time or £300 in total over the year.
The occasional treat will keep both your employees (if you have any) and your bank balance happy. Win-win!
Use of your home office
HMRC automatically allows a no questions asked deduction for the use of your home office which equates to £4 per week. This is to help towards everyday expenses like utility bills, council tax and rent (if applicable). This doesn’t, however, cover the cost of internet or phone (you will need to calculate these expenses proportionately).
Top tip: If your home office is your primary place of work, use the flat rate expense scheme as a quick and easy way to claim back cash spent.
Use a computer everyday? You can claim the cost of your annual check-up as part of your tax return. HMRC include this as an allowable expense on the basis of health and wellbeing as your computer is an essential tool for your work. You can’t, however, claim back the cost of glasses and contact lenses (unless you can prove these are specifically for monitor/screen work and not used outside of work)
Business miles aren’t only claimable if you drive or use public transport - you can claim the cost of mileage to temporary workplaces and business meetings even if you cycle. Just record your distance, calculate the mileage and you could be entitled to up to 20p per mile. While this might not seem like a lot, it’s a good incentive to leave the car at home, get some exercise and do your bit for the environment.
There’s plenty of free information online but sometimes it just doesn’t run deep enough. As long as you can justify that these costs are exclusively for work, you can claim the expense of magazine and journal subscriptions.
Top tip: Always keep receipts for your purchases as this will make claiming money back easier, you are also required by HMRC to keep a record of these for six years.
The cost of forming a limited company
Working through your own limited company is one of the most popular ways for the self-employed to operate. If you decide to start working for yourself, there will be a few small costs from the offset - like paying Companies House to register the business. Don’t let this put you off though - you can claim the costs of starting your company as an allowable business expense, so you’ll be up and running in no time. Although, it’s worth noting that this formation cost would not receive Corporation Tax relief.
If you have a separate bank account for your business (which is a must as a limited company director), you can expense the cost of any bank charges, overdrafts, interest on business loans and even leasing payments. If you’re a sole-trader or you use a cash-based accounting system, you can claim up to £500 back for each financial year.
Use of your home internet
Unfortunately, there’s no opportunity to expense those hours you’ve sat idly scrolling through your Facebook feed or online shopping. But for all the times you’ve used your broadband for emailing back and forth with your client and finding work, it’s an allowable cost.
Whether you’re newly self-employed or you’ve been going it alone for years, knowing what you can and can’t claim as an expense can sometimes be difficult to get your head around. Luckily, you don’t have to go it alone. With a specialist accountant by your side such as SJD Accountancy, you’ll have an expert who can assist you in all things expenses, so you have peace of mind you are claiming the correct and proper amount from your business.
Meet the author
CaroolaCaroola is a UK-based accountancy firm that provides accountancy services to contractors with private limited companies.