twenty third Sep 2025
Studying Time: 12 minutes
Freelancers have to finish a Self Evaluation tax return by January thirty first yearly. This contains itemizing all of your earnings for the tax yr – and your allowable bills. However what are you able to embrace as a reputable expense -and what’s going to HMRC refuse?
Let’s have a look at what you may – and may’t – embrace as an allowable expense in your Self Assessment. This information is for sole merchants – taxes for Restricted Firms, PLCs, and charities are totally different.
The Buying and selling Allowance
The Trading Allowance is ideal if you happen to flip over lower than £1,000 a yr together with your self-employment. For instance, if you happen to occassionally babysit or do some backyard chores, or in case you have a small enterprise that’s simply getting began.
You don’t must register as self-employed with HMRC if you happen to flip over £1,000 or much less in a tax yr. Nevertheless, you may’t declare bills if you happen to do it this manner. So, if you happen to flip over £1,000 however your bills price £500, you may’t write off that £500 to maximise your income. In the event you assume you’ll flip over greater than £1,000, otherwise you wish to offset your bills towards your earnings, it’s best to register as self-employed with HMRC.
Wholly and Completely Defined
Earlier than you begin throwing every thing on your small business account as an expense in your Self Assessment, maintain up! Chances are you’ll have to show to the tax man that your expense was incurred ‘wholly and solely’ within the line of labor.
For instance, you may’t e book a two-week vacation to attend a one-day convention and declare your complete price. You may, nonetheless, declare the journey required to get to the convention, and the lodge one night time earlier than (and even after, relying on the space from dwelling and journey necessities). The remainder of your lodging and journey bills – i.e., your vacation – should come out of your individual pocket.
Private Use Objects Used for Enterprise
Typically, particularly whenever you’re beginning out, you’ll use private stuff within the line of enterprise. You may use your cell phone, for instance, or your laptop computer, whenever you’re first working your freelance enterprise.
You may’t declare the total invoice – however you may work out the affordable portion of the fee that’s used within the line of enterprise. For instance, you possibly can work out what number of minutes you used out of your cell phone month-to-month tariff for enterprise functions and use that as a proportionate quantity to assert.
Simplified vs Precise Bills
In the event you run a low-overhead enterprise, your prices could are available at beneath £1000 a yr. If that is so, you may declare utilizing ‘simplified bills’ for some issues. This contains the enterprise use of autos, price of working from dwelling, and residing in your small business premises. All the things else must be labored out as precise prices.
Simplified bills saves you an enormous headache! You employ flat price bills set by HMRC to make approximated expense claims, reasonably than including up each single mile you’ve travelled within the yr (for instance). Try the Gov.uk web site for extra particulars about simplified expenses.
The flat price for working from dwelling, for instance, is £10 monthly for between 25-50 hours a month, £18 for 51-100 hours, and £26 for 101+ hours a month. This could internet you greater than understanding precise bills (see under).
Conventional vs Money Foundation Accounting
Resolve if you wish to observe the normal or money foundation accounting choices. Conventional accounting is the place you depend the invoices despatched out that month – not essentially the cash obtained. This may be helpful whenever you’re establishing in case you have plenty of stock or lengthy fee phrases, as you’ll be capable of offset unpaid invoices.
Money foundation accounting is usually easier for sole merchants to make use of, although. It solely takes under consideration the cash you’ve really obtained in that tax yr, and the precise bills incurred.
Whichever foundation you employ, be sure to hold ALL RECEIPTS for at the least seven years. Additionally, you will have to be ready for Making Tax Digital, which begins rolling out from April 2026 for these with a turnover of £50,000 or above. So, contemplate getting a enterprise checking account with built-in HMRC-approved MTD software program like Freeagent or Xero. It will make the quarterly returns required a lot simpler.
Working from Dwelling vs Renting Workplace Area
Many freelancers make money working from home – both for price causes or private desire. Others prefer to lease a desk in an workplace – or have a membership to versatile co-working areas for the times that the identical 4 partitions drive them crazy!
You may declare some prices incurred by working from dwelling as an allowable expense in your tax return. You may’t, sadly, expense your total Council Tax or electrical energy payments – however you may expense a few of them.
Rooms you may embrace
Use the variety of rooms in your house for the calculations. You may embrace residing areas, bedrooms, kitchens, workplace areas, even garages if you happen to work in it. You may’t use lobbies, porches, hallways (together with mezzanine areas) – however in case you have a backyard room that’s in your primary energy provide, you may embrace that.
Rely what number of rooms you could have in your house. Divide your month-to-month payments whole by the variety of rooms you’ve bought. Say your payments come to £350 and you’ve got 5 rooms – that’s £70 a room. Then, have a look at the period of time you employ every room for work.
Let’s say you’re employed 100 hours a month. You spend 50 hours in the lounge (room price £70 x 50% time = £35), 30 hours within the kitchen (£70 x 30% = £21), and 20 hours in your backyard room (£70 x 20% = £14). So, that’s £35 + £21 + 14 = £70 bills allowed.
Why not use one room?
Even in case you have a devoted dwelling workplace, be sure to use it for private use in some way. This could possibly be storing private gadgets in it or generally watching a movie in your laptop computer in there. Why?
Capital Beneficial properties Tax! In the event you promote your own home and have used just one room solely for work, you open your self as much as a CGT invoice. That’s why it’s higher to work out share time reasonably than only one room’s use!
Payments you may expense
Calculate each invoice: lease or mortgage curiosity (not whole mortgage repayments), electrical energy, fuel, Council Tax, water. Your phone and broadband payments might be labored out on a share utilization reasonably than room calculations, if you happen to don’t have devoted enterprise telephones and broadband.
Workplace Tools and Furnishings
Do you employ a selected desk, chair, or submitting cupboard? Have you ever bought bulbs for the lamp in your desk? Maybe you’ve bought a noticeboard on the wall to your vital paperwork and reminders.
Something that you simply purchase that’s wholly and solely for your small business might be claimed. If there’s any private use – resembling an workplace chair you sit on to observe YouTube in your lunch break – low cost the proportion of time you employ it for private actions towards the fee.
Energy cables, surge protectors, monitor risers: every thing and something you employ to equip your workplace house might be included.
This additionally contains enterprise bills resembling postage, envelopes, printer ink, paper, and stationery. You may as well embrace software program purchases – together with month-to-month subscriptions to issues like Dropbox or Workplace 365.
Computer systems and Expertise
Do you employ a desk with a PC and screens? A laptop computer raised up on a stand? A particular cell phone for work?
You may low cost all these prices as an allowable expense! Nevertheless, it is best to be sure that it counts as an allowable expense reasonably than a capital expenditure. An allowable expense is one thing you’ll use for lower than two years – resembling lease, payments, and stationery. In the event you use money foundation accounting, computer systems are allowable bills, too. Nevertheless, if you happen to use conventional accounting, tools is a capital allowance.
As with the opposite issues, if you happen to use your laptop or cell phone for private use, it’s important to declare proportionately.
Contractor Bills and Skilled Charges
“You need to spend cash to earn money” is de facto very true in terms of launching and sustaining a self-employed enterprise.
Among the finest investments you can also make in your small business is getting the proper folks to do every job for you. Whereas many self-employed folks operating their very own enterprise are concurrently accountant, marketer, gross sales particular person, doer-of-the-actual-thing, social media govt – it’s really higher to rent folks if you happen to can.
You may offset the price of skilled charges, resembling accountants and solicitors, as an allowable expense. Utilizing knowledgeable will prevent a LOT of time and enable you keep away from doubtlessly huge (and expensive) complications sooner or later.
In the event you want a serving to hand to assist run a stand at an exhibition, otherwise you wish to pay somebody to run your social media, these prices fall beneath allowable bills, too. That is totally different to having an worker: you have to use contractors right here, reasonably than rent somebody on payroll. If you need an worker, you’ll have to be a Limited Company and make employer Nationwide Insurance coverage and pension contributions. Utilizing contractors means you pay the set payment on the bill with out the above prices.
Banking Charges
Sole merchants don’t HAVE to have a separate checking account – but it surely’s advisable to set one up, particularly with Making Tax Digital across the nook, which might contain direct reporting out of your checking account. You need to use a present account, reasonably than a enterprise account, which regularly means no banking prices.
Nevertheless, if you need entry to enterprise bank cards, loans, and even to work with public organisations, you’ll want a enterprise account. These come at a value – however you may offset month-to-month charges as an allowable expense. You may as well declare overdraft prices, bank card curiosity funds, leasing prices, and foreign money conversion charges.
These utilizing conventional accounting may declare for dangerous money owed. That is when a buyer hasn’t paid you. You’ll have to point out you’ve tried to recuperate the cash first, but when there’s no luck (resembling your buyer has gone bankrupt) you may write this off towards your income.
Insurance coverage Counts, Too
As a enterprise proprietor, it’s crucial to have business insurance. On the very minimal, skilled indemnity insurance coverage helps shield you towards claims from shoppers. In the event you run exhibition stands or folks go to your premises, you’ll additionally want public legal responsibility insurance coverage by legislation. These prices all depend for allowable bills.
In the event you’re a member of knowledgeable organisation or union, you may typically embrace skilled indemnity insurance coverage in your membership, so it’s price checking the high quality print earlier than you’re taking out a separate coverage.
Advertising Prices
You may’t run a enterprise if you happen to don’t shout about it! All the things you do to market your small business can depend in direction of allowable bills.
So, whenever you arrange your web site, your internet hosting and area prices are allowable bills. Your flyers, enterprise playing cards, and on-line pay-per-click adverts are all counted, too! When you’ve got a product to promote, sending free samples to reviewers is classed as advertising.
Attending an occasion? Get branded gadgets from Vistaprint like pens, stress balls, keyrings, and every thing else it’s essential give away as tempting freebies – all of them depend as a reputable advertising expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to record your small business in a listing, and your junk mail prices.
Alas, taking potential shoppers out for dinner doesn’t depend as advertising. ‘Consumer leisure’ isn’t an allowable expense. If, nonetheless, you meet with somebody to get their recommendation on a enterprise facet and purchase them lunch as a substitute of paying for his or her consulting time, this may be expensed as it’s a fee in sort. You may as well cost subsistence for drinks and meals to an affordable quantity in case you are working away out of your traditional workplace, resembling if it’s important to go to a distinct metropolis for a convention.
Clothes and Uniforms
Do you wish to get t-shirts together with your brand on? What about branded hoodies from Vistaprint? Maybe you wish to put on a wise uniform that’s solely used to your line of labor, resembling if you happen to run your individual cleansing enterprise. Or, if you happen to want particular clothes resembling steel-capped security boots, these might be claimed.
You may declare branded clothes as a advertising expense. You may as well declare uniform prices – and you’ll declare laundry prices for uniforms, too.
You may’t, nonetheless, declare for garments that you simply’d put on usually at dwelling. Or perhaps a enterprise go well with for conferences if you happen to’re often in denims and a hoodie! The rule with clothes could be very a lot that it both has to depend as advertising (i.e., branded) OR used as a uniform ‘wholly and solely’ for your small business.
The one exception to claiming for clothes that’s not task- or uniform-specific is for performers like actors. They typically want to purchase garments for auditions or their very own performances, so if it’s a costume it’s an allowable expense.
Continued Training
That is an fascinating one. You may embrace issues like commerce magazines in your allowable bills, plus membership to recognised business organisations in the event that they’re associated to your small business.
Additional training additionally counts as an allowable expense if it builds on a ability you have already got for your small business. For instance, if you happen to’re a contract occasions producer, your job is usually advertising. So, you possibly can declare for a advertising diploma or perhaps a full CIMA qualification. Nevertheless, you couldn’t resolve you wished to vary careers as a bricklayer and depend that course as an allowable expense.
This nonetheless leaves your alternative base fairly broad, particularly if you happen to’re a sole dealer. For instance, let’s say you’re a contract author – numerous writers profit from studying the way to use graphic design software program. So, a web based Photoshop course may depend. Or, any business-related course resembling a bookkeeping qualification can even qualify for any sole dealer, as they want these expertise to construct and keep their enterprise.
Attending commerce conferences and occasions additionally counts as continued skilled training – so be sure to put your ticket prices down as an allowable expense, too!
Journey and Autos
In the event you commute commonly to an workplace, you may’t declare these prices as an expense. All the things else although is a superb large tick within the Sure You Can Declare column!
Practice, bus, even air fares all depend if you happen to’re travelling wholly and solely for enterprise functions. In the event you purchase a automobile solely for your small business, you may depend the acquisition as a capital expense (or the lease charges as an allowable expense). All MOT, insurance coverage, servicing, repairs, parking, and gas is allowed, too.
In the event you use your private automotive to journey for work, you may declare mileage prices. That is primarily based on the HMRC mileage rates which is ready pretty excessive so ought to cowl gas prices in addition to put on and tear incurred.
Different Bills to Take into account
There are many different prices that MIGHT be an allowable expense. You might want to ask your self if it’s used ‘wholly and solely’ for enterprise use. Listed here are some examples you might come throughout – all of it will depend on your line of labor and whether or not you employ one thing just for your small business with no private use.
Subscriptions
Commerce journals are a transparent allowable expense, as is subscription-based software program like GSuite or Dropbox. However do you know you possibly can declare for different issues – together with shopping for books and newspapers, and even subscriptions like Netflix and Spotify?!
You might want to show an actual enterprise use. Enjoying Netflix when you’re working for ‘workplace leisure’ doesn’t depend! Nevertheless, in case you are – for instance – an actor or budding movie director, you possibly can justify the subscription as a analysis instrument. The identical goes for Spotify if you happen to’re a musician or podcaster, and even issues like Twitch if you happen to’re a gamer making an attempt to make an earnings from streaming.
Health club prices
Now, 99.99% of the time this received’t wash with HMRC. HOWEVER, in case you are – for instance – a sports activities mannequin, it’s your job to maintain match and keep trying wholesome. In the event you’re a private coach, fitness center tools counts as an allowable expense, too.
Haircuts and wonder remedies
In case your job is predicated primarily in your look – i.e., you’re a mannequin or an actor – you possibly can attempt claiming prices for hair and wonder remedies. You’ll want to have the ability to show, if questioned, that the expense was a reputable enterprise declare although!
Resorts
Travelling anyplace for enterprise conferences or occasions typically means going a great distance from dwelling. You’re entitled to assert your lodging price as an allowable expense in case your journey is 100% enterprise associated. In the event you select to increase your journey, you may solely declare the nights that had been required to your assembly.
In a single day meals
Like lodges, if you happen to’re travelling away out of your major workplace for an in a single day or prolonged journey, you may account for in a single day meals. This doesn’t imply going all-out and getting a steak dinner with champagne although – the fee should appear affordable.
Pensions
We are able to’t stress this sufficient: contribute to your pension! Self-employed folks typically put themselves final, particularly their older-way-in-the-future selves. Begin squirrelling away cash into your pension each month – even when it’s a small quantity.
Whereas it’s not an allowable expense on the tax return, there’s one other part that asks you to declare your pension contributions. It’s vital you embrace your whole annual contributions right here, because it means you’ll benefit from the tax reduction on provide – which means free cash to your pension pot!
Guard canine
One of many funniest claims we’ve heard of being accepted by HMRC is a guard canine. You’re entitled to assert for safety prices to your small business premises – in case your canine is taken into account a guard canine, technically you may declare for his or her buy, maintenance, vet payments and meals! Nevertheless, at all times do not forget that HMRC may audit you at any time – so if you happen to’re considering of itemizing your chihuahua as a guard canine, perhaps assume twice…
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