Tax Allowable Expenses for the Self Employed

If you’re self employed, one way that you can reduce the amount of tax that you pay is to make sure you claim all your tax allowable expenses.

However, not all expenses are deductible. Our guide looks at what expenses you are (and are not) allowed to claim.

Tax expenses the self employed can claim

There are lots of expenses that you are allowed to claim, in three broad categories.

Business premises

If you work from dedicated business premises, you can claim many of the costs incurred in keeping these premises running. These include lighting, heating, water rates, cleaning, rent, business rates and the costs of general maintenance to your premises.

If you work from home, you can claim a proportion of costs such as lighting, Council Tax, insurance, water rates, mortgage interest, heating, cleaning and general maintenance. You normally do this by working out what proportion of your home is used for business purposes.

Salaries

When you run your own business, allowable tax expenses also include employee’s salaries and benefits.
These include employers’ National Insurance contributions, employee’s salaries, insurance and pension benefits for your employees, training costs and any employee childcare provision you make.

Travel

If you use your private car for business purposes – perhaps to visit clients at their home or to make deliveries – you can claim a mileage allowance for these miles. The amount you can claim depends on the type of vehicle that you use, and you can only claim business mileage, not personal mileage.

In addition to these tax expenses you can also claim other costs specific to your business. These may include the cost of stock or raw materials.

What you can’t claim

It is important that you understand what you are not allowed to claim for.

For example, whilst you can claim your employees’ salaries, you can’t claim your own wages, National Insurance contributions, life insurance or income tax as an allowable tax expense.

You also cannot claim the initial purchase of business premises or improvements (such as building an extension) although these may qualify for other capital allowances.

You also can’t claim business mileage for the journey between your home and your business premises.

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