twenty third Sep 2025
Studying Time: 12 minutes
Freelancers have to finish a Self Evaluation tax return by January thirty first yearly. This consists of itemizing all of your revenue for the tax yr – and your allowable bills. However what are you able to embody as a reliable expense -and what is going to HMRC refuse?
Let’s take a look at what you may – and may’t – embody as an allowable expense in your Self Evaluation. This information is for sole merchants – taxes for Restricted Corporations, PLCs, and charities are totally different.
The Buying and selling Allowance
The Buying and selling 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 you probably have a small enterprise that’s simply getting began.
You don’t should 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 fashion. So, if you happen to flip over £1,000 however your bills value £500, you may’t write off that £500 to maximise your income. In the event you suppose you’ll flip over greater than £1,000, otherwise you wish to offset your bills towards your revenue, it’s best to register as self-employed with HMRC.
Wholly and Solely Defined
Earlier than you begin throwing all the pieces on your enterprise account as an expense in your Self Evaluation, maintain up! It’s possible you’ll must show to the tax man that your expense was incurred ‘wholly and solely’ within the line of labor.
For instance, you may’t ebook a two-week vacation to attend a one-day convention and declare all the value. You may, nonetheless, declare the journey required to get to the convention, and the resort one evening earlier than (and even after, relying on the gap from dwelling and journey necessities). The remainder of your lodging and journey bills – i.e., your vacation – should come out of your personal pocket.
Private Use Objects Used for Enterprise
Typically, particularly once you’re beginning out, you’ll use private stuff within the line of enterprise. You would possibly use your cell phone, for instance, or your laptop computer, once you’re first working your freelance enterprise.
You may’t declare the complete invoice – however you may work out the affordable portion of the price that’s used within the line of enterprise. For instance, you 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 say.
Simplified vs Precise Bills
In the event you run a low-overhead enterprise, your prices could are available in at below £1000 a yr. If so, you may declare utilizing ‘simplified bills’ for some issues. This consists of the enterprise use of autos, value of working from dwelling, and dwelling in your enterprise premises. Every part else must be labored out as precise prices.
Simplified bills saves you an enormous headache! You utilize flat fee bills set by HMRC to make approximated expense claims, fairly than including up each single mile you’ve travelled within the yr (for instance). Take a look at the Gov.uk web site for extra particulars about simplified bills.
The flat fee for working from dwelling, for instance, is £10 per thirty days 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 beneath).
Conventional vs Money Foundation Accounting
Determine if you wish to observe the standard or money foundation accounting choices. Conventional accounting is the place you depend the invoices despatched out that month – not essentially the cash acquired. This may be helpful once you’re establishing you probably have a variety of stock or lengthy cost phrases, as you’ll be capable of offset unpaid invoices.
Money foundation accounting is usually less complicated for sole merchants to make use of, although. It solely takes into consideration the cash you’ve truly acquired in that tax yr, and the precise bills incurred.
Whichever foundation you utilize, ensure you hold ALL RECEIPTS for at the least seven years. Additionally, you will should be ready for Making Tax Digital, which begins rolling out from April 2026 for these with a turnover of £50,000 or above. So, think about 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 House
Many freelancers work at home – both for value causes or private choice. Others wish to hire 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 whole Council Tax or electrical energy payments – however you may expense a few of them.
Rooms you may embody
Use the variety of rooms in your house for the calculations. You may embody dwelling 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 you probably have a backyard room that’s in your most important energy provide, you may embody that.
Rely what number of rooms you will have in your house. Divide your month-to-month payments complete 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, take a look at the period of time you utilize every room for work.
Let’s say you’re employed 100 hours a month. You spend 50 hours in the lounge (room value £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 you probably have a devoted dwelling workplace, ensure you use it for private use one way or the other. This may very well be storing private gadgets in it or typically watching a movie in your laptop computer in there. Why?
Capital Positive factors Tax! In the event you promote your property 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 proportion time fairly than only one room’s use!
Payments you may expense
Calculate each invoice: hire or mortgage curiosity (not complete mortgage repayments), electrical energy, fuel, Council Tax, water. Your phone and broadband payments may be labored out on a proportion utilization fairly than room calculations, if you happen to don’t have devoted enterprise telephones and broadband.
Workplace Gear and Furnishings
Do you utilize 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 in your essential paperwork and reminders.
Something that you just purchase that’s wholly and solely for your enterprise may be claimed. If there’s any private use – reminiscent of an workplace chair you sit on to look at YouTube in your lunch break – low cost the proportion of time you utilize it for private actions towards the price.
Energy cables, surge protectors, monitor risers: all the pieces and something you utilize to equip your workplace area may be included.
This additionally consists of enterprise bills reminiscent of postage, envelopes, printer ink, paper, and stationery. It’s also possible to embody software program purchases – together with month-to-month subscriptions to issues like Dropbox or Workplace 365.
Computer systems and Know-how
Do you utilize a desk with a PC and screens? A laptop computer raised up on a stand? A selected cell phone for work?
You may low cost all these prices as an allowable expense! Nevertheless, you must be certain that it counts as an allowable expense fairly than a capital expenditure. An allowable expense is one thing you’ll use for lower than two years – reminiscent of hire, 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 pc or cell phone for private use, it’s a must to declare proportionately.
Contractor Bills and Skilled Charges
“You need to spend cash to earn a living” is absolutely very true in relation to launching and sustaining a self-employed enterprise.
Among the best investments you can also make in your enterprise is getting the precise 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 government – it’s truly higher to rent folks if you happen to can.
You may offset the price of skilled charges, reminiscent of accountants and solicitors, as an allowable expense. Utilizing knowledgeable will prevent a LOT of time and aid you keep away from doubtlessly huge (and dear) 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 below allowable bills, too. That is totally different to having an worker: it’s essential to use contractors right here, fairly than rent somebody on payroll. In order for you an worker, you’ll should be a Restricted Firm and make employer Nationwide Insurance coverage and pension contributions. Utilizing contractors means you pay the set charge 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 may contain direct reporting out of your checking account. You need to use a present account, fairly than a enterprise account, which frequently means no banking fees.
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 price – however you may offset month-to-month charges as an allowable expense. It’s also possible to declare overdraft fees, bank card curiosity funds, leasing prices, and foreign money conversion charges.
These utilizing conventional accounting can even declare for dangerous money owed. That is when a buyer hasn’t paid you. You’ll have to point out you’ve tried to get better the cash first, but when there’s no luck (reminiscent of 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 enterprise insurance coverage. 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 regulation. These prices all depend for allowable bills.
In the event you’re a member of knowledgeable organisation or union, you may usually embody skilled indemnity insurance coverage in your membership, so it’s value checking the high-quality print earlier than you are taking out a separate coverage.
Advertising Prices
You may’t run a enterprise if you happen to don’t shout about it! Every part you do to market your enterprise can depend in the direction of allowable bills.
So, once 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! In case you have 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 all the pieces else it’s essential to give away as tempting freebies – all of them depend as a reliable advertising expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to listing your enterprise in a listing, and your junk mail prices.
Alas, taking potential shoppers out for dinner doesn’t depend as advertising. ‘Shopper leisure’ isn’t an allowable expense. If, nonetheless, you meet with somebody to get their recommendation on a enterprise side and purchase them lunch as a substitute of paying for his or her consulting time, this may be expensed as it’s a cost in form. It’s also possible to cost subsistence for drinks and meals to an affordable quantity if you’re working away out of your normal place of job, reminiscent of if it’s a must to go to a unique 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 sensible uniform that’s solely used in your line of labor, reminiscent of if you happen to run your personal cleansing enterprise. Or, if you happen to want particular clothes reminiscent of steel-capped security boots, these may be claimed.
You may declare branded clothes as a advertising expense. It’s also possible to declare uniform prices – and you’ll declare laundry prices for uniforms, too.
You may’t, nonetheless, declare for garments that you just’d put on usually at dwelling. Or perhaps a enterprise swimsuit for conferences if you happen to’re normally 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 enterprise.
The one exception to claiming for clothes that’s not task- or uniform-specific is for performers like actors. They usually 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 embody issues like commerce magazines in your allowable bills, plus membership to recognised business organisations in the event that they’re associated to your enterprise.
Additional schooling additionally counts as an allowable expense if it builds on a talent you have already got for your enterprise. For instance, if you happen to’re a contract occasions producer, your job is generally advertising. So, you can declare for a advertising diploma or perhaps a full CIMA qualification. Nevertheless, you couldn’t resolve you wished to alter 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 – plenty of writers profit from studying the best way to use graphic design software program. So, a web based Photoshop course might depend. Or, any business-related course reminiscent of a bookkeeping qualification will even qualify for any sole dealer, as they want these expertise to construct and preserve their enterprise.
Attending commerce conferences and occasions additionally counts as continued skilled schooling – so ensure you put your ticket prices down as an allowable expense, too!
Journey and Autos
In the event you commute frequently to an workplace, you may’t declare these prices as an expense. Every part else although is a superb large tick within the Sure You Can Declare column!
Prepare, 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 enterprise, 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 based mostly on the HMRC mileage charges which is ready pretty excessive so ought to cowl gas prices in addition to put on and tear incurred.
Different Bills to Contemplate
There are many different prices that MIGHT be an allowable expense. You’ll want to ask your self if it’s used ‘wholly and solely’ for enterprise use. Listed here are some examples it’s possible you’ll come throughout – all of it relies on your line of labor and whether or not you utilize one thing just for your enterprise 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 can declare for different issues – together with shopping for books and newspapers, and even subscriptions like Netflix and Spotify?!
You’ll want to show an actual enterprise use. Taking part in Netflix whilst you’re working for ‘workplace leisure’ doesn’t depend! Nevertheless, if you’re – for instance – an actor or budding movie director, you can justify the subscription as a analysis device. 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 attempting to make an revenue from streaming.
Gymnasium prices
Now, 99.99% of the time this gained’t wash with HMRC. HOWEVER, if you’re – 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, health club tools counts as an allowable expense, too.
Haircuts and sweetness remedies
In case your job relies primarily in your look – i.e., you’re a mannequin or an actor – you can strive claiming prices for hair and sweetness remedies. You’ll want to have the ability to show, if questioned, that the expense was a reliable enterprise declare although!
Motels
Travelling anyplace for enterprise conferences or occasions usually means going a great distance from dwelling. You’re entitled to say your lodging value 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 in your assembly.
In a single day meals
Like inns, if you happen to’re travelling away out of your major place of job 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 price should appear affordable.
Pensions
We are able to’t stress this sufficient: contribute to your pension! Self-employed folks usually 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 essential you embody your complete annual contributions right here, because it means you’ll take advantage of the tax aid on supply – which means free cash in your pension pot!
Guard canines
One of many funniest claims we’ve heard of being accepted by HMRC is a guard canine. You’re entitled to say for safety prices to your enterprise 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 might audit you at any time – so if you happen to’re considering of itemizing your chihuahua as a guard canine, perhaps suppose twice…
