Expenses if you're self-employed

Understanding the categories of allowable expenses and capital allowances is important for effective financial management. 

Allowable expenses cover many operational costs, such as office supplies, travel, and staff salaries. You can use capital allowances for significant purchases. These include equipment and vehicles used in your business. Categorise and claim these costs to get the most tax benefits. 

If you work from home specific rules apply.

Costs you can claim as allowable expenses

These include:

• office costs, eg stationery or phone bills
• travel costs, eg fuel, parking, train or bus fares
• clothing expenses, eg uniforms
• staff costs, eg salaries or subcontractor costs
• things you buy to sell on, eg stock or raw materials
• financial costs, eg insurance or bank charges
• costs of your business premises, eg heating, lighting, business rates
• advertising or marketing, eg website costs

Contact the Self Assessment helpline if you're not sure whether a business cost is an allowable expense.

Costs you can claim as capital allowances

If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:

• equipment
• machinery
• business vehicles, eg cars, vans, lorries

If you use cash basis

If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.

If you use something for both business and personal reasons

You can only claim allowable expenses for the business costs. For example, your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business. You can claim for £70 of business expenses.

If you work from home

You may be able to claim a proportion of your costs for things like:

• heating
• electricity
• rates
• mortgage interest or rent
• internet and telephone use

You'll need to find a reasonable method of dividing your costs. For example, you could do it by the number of rooms you use for business or the amount of time you work from home.

Simplified expenses

You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:

• vehicles
• working from home
• living on your business premises