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 12 months – and your allowable bills. However what are you able to embrace as a authentic expense -and what’s going to HMRC refuse?
Let’s have a look at what you’ll be able to – and may’t – embrace as an allowable expense in your Self Evaluation. This information is for sole merchants – taxes for Restricted Firms, PLCs, and charities are totally different.
The Buying and selling Allowance
The Buying and selling Allowance is ideal in case you flip over lower than £1,000 a 12 months together with your self-employment. For instance, in case you occassionally babysit or do some backyard chores, or if in case you have a small enterprise that’s simply getting began.
You don’t need to register as self-employed with HMRC in case you flip over £1,000 or much less in a tax 12 months. Nonetheless, you’ll be able to’t declare bills in case you do it this manner. So, in case you flip over £1,000 however your bills price £500, you’ll be able to’t write off that £500 to maximise your earnings. In the event you assume you’ll flip over greater than £1,000, otherwise you need to offset your bills towards your earnings, it’s best to register as self-employed with HMRC.
Wholly and Solely Defined
Earlier than you begin throwing every little thing on your enterprise account as an expense in your Self Evaluation, maintain up! Chances are you’ll must show to the tax man that your expense was incurred ‘wholly and solely’ within the line of labor.
For instance, you’ll be able to’t e book a two-week vacation to attend a one-day convention and declare the whole price. You may, nevertheless, declare the journey required to get to the convention, and the resort one evening earlier than (and even after, relying on the gap from residence 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
Generally, particularly if 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, if you’re first working your freelance enterprise.
You may’t declare the complete invoice – however you’ll be able to work out the affordable portion of the price that’s used within the line of enterprise. For instance, you could possibly 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 in at underneath £1000 a 12 months. If so, you’ll be able to declare utilizing ‘simplified bills’ for some issues. This contains the enterprise use of autos, price of working from residence, and dwelling in your enterprise premises. Every part else must be labored out as precise prices.
Simplified bills saves you a giant headache! You employ flat price bills set by HMRC to make approximated expense claims, somewhat than including up each single mile you’ve travelled within the 12 months (for instance). Take a look at the Gov.uk web site for extra particulars about simplified bills.
The flat price for working from residence, 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 may web you greater than figuring out precise bills (see under).
Conventional vs Money Foundation Accounting
Determine if you wish to comply with the standard or money foundation accounting choices. Conventional accounting is the place you rely the invoices despatched out that month – not essentially the cash acquired. This may be helpful if you’re organising if in case you have a variety of stock or lengthy fee phrases, as you’ll be capable of offset unpaid invoices.
Money foundation accounting is commonly easier for sole merchants to make use of, although. It solely takes into consideration the cash you’ve truly acquired in that tax 12 months, and the precise bills incurred.
Whichever foundation you utilize, be sure you maintain ALL RECEIPTS for a minimum of seven years. Additionally, you will must 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. This may make the quarterly returns required a lot simpler.
Working from House vs Renting Workplace Area
Many freelancers do business from home – both for price causes or private desire. 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 residence as an allowable expense in your tax return. You may’t, sadly, expense your whole Council Tax or electrical energy payments – however you’ll be able to expense a few of them.
Rooms you’ll be able to embrace
Use the variety of rooms in your house for the calculations. You may embrace dwelling areas, bedrooms, kitchens, workplace areas, even garages in case you work in it. You may’t use lobbies, porches, hallways (together with mezzanine areas) – however if in case you have a backyard room that’s in your essential energy provide, you’ll be able to embrace that.
Depend what number of rooms you have got in your house. Divide your month-to-month payments whole by the variety of rooms you’ve received. 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 utilize 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 if in case you have a devoted residence workplace, be sure you use it for private use one way or the other. This might be storing private objects in it or generally watching a movie in your laptop computer in there. Why?
Capital Good points 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 somewhat than only one room’s use!
Payments you’ll be able to expense
Calculate each invoice: hire or mortgage curiosity (not whole mortgage repayments), electrical energy, gasoline, Council Tax, water. Your phone and broadband payments could be labored out on a share utilization somewhat than room calculations, in case you don’t have devoted enterprise telephones and broadband.
Workplace Tools and Furnishings
Do you utilize a particular desk, chair, or submitting cupboard? Have you ever bought bulbs for the lamp in your desk? Maybe you’ve received a noticeboard on the wall on your vital paperwork and reminders.
Something that you simply purchase that’s wholly and solely for your enterprise could 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 utilize it for private actions towards the price.
Energy cables, surge protectors, monitor risers: every little thing and something you utilize to equip your workplace house could be included.
This additionally contains enterprise bills resembling postage, envelopes, printer ink, paper, and stationery. You may also embrace 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! Nonetheless, you must be sure that it counts as an allowable expense somewhat than a capital expenditure. An allowable expense is one thing you’ll use for lower than two years – resembling hire, payments, and stationery. In the event you use money foundation accounting, computer systems are allowable bills, too. Nonetheless, in case you use conventional accounting, tools is a capital allowance.
As with the opposite issues, in case you use your pc or cell phone for private use, it’s important to declare proportionately.
Contractor Bills and Skilled Charges
“It’s important to spend cash to earn money” is absolutely very true with regards to launching and sustaining a self-employed enterprise.
Top-of-the-line investments you may make in your enterprise is getting the correct folks to do every activity for you. Whereas many self-employed folks working 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 in case you 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 allow you to 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 need to pay somebody to run your social media, these prices fall underneath allowable bills, too. That is totally different to having an worker: it’s essential to use contractors right here, somewhat than rent somebody on payroll. If you’d like an worker, you’ll must be a Restricted Firm 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 – however it’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, somewhat than a enterprise account, which frequently means no banking prices.
Nonetheless, if you’d like 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’ll be able to offset month-to-month charges as an allowable expense. You may also declare overdraft prices, bank card curiosity funds, leasing prices, and forex conversion charges.
These utilizing conventional accounting may also declare for dangerous money owed. That is when a buyer hasn’t paid you. You’ll have to indicate you’ve tried to get well the cash first, but when there’s no luck (resembling your buyer has gone bankrupt) you’ll be able to write this off towards your earnings.
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 rely for allowable bills.
In the event you’re a member of knowledgeable organisation or union, you’ll be able to usually embrace skilled indemnity insurance coverage in your membership, so it’s price checking the advantageous print earlier than you are taking out a separate coverage.
Advertising and marketing Prices
You may’t run a enterprise in case you don’t shout about it! Every part you do to market your enterprise can rely in the direction of allowable bills.
So, if 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! If in case you have a product to promote, sending free samples to reviewers is classed as advertising and marketing.
Attending an occasion? Get branded objects from Vistaprint like pens, stress balls, keyrings, and every little thing else you have to give away as tempting freebies – all of them rely as a authentic advertising and marketing expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to checklist your enterprise in a listing, and your unsolicited mail prices.
Alas, taking potential shoppers out for dinner doesn’t rely as advertising and marketing. ‘Shopper leisure’ isn’t an allowable expense. If, nevertheless, you meet with somebody to get their recommendation on a enterprise side and purchase them lunch as an alternative of paying for his or her consulting time, this may be expensed as it’s a fee in sort. You may also cost subsistence for drinks and meals to an affordable quantity if you’re working away out of your normal workplace, resembling if it’s important to go to a unique metropolis for a convention.
Clothes and Uniforms
Do you need to get t-shirts together with your brand on? What about branded hoodies from Vistaprint? Maybe you need to put on a sensible uniform that’s solely used on your line of labor, resembling in case you run your personal cleansing enterprise. Or, in case you want particular clothes resembling steel-capped security boots, these could be claimed.
You may declare branded clothes as a advertising and marketing expense. You may also declare uniform prices – and you’ll declare laundry prices for uniforms, too.
You may’t, nevertheless, declare for garments that you simply’d put on usually at residence. Or perhaps a enterprise go well with for conferences in case you’re often in denims and a hoodie! The rule with clothes could be very a lot that it both has to rely as advertising and marketing (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 Schooling
That is an attention-grabbing 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 enterprise.
Additional schooling additionally counts as an allowable expense if it builds on a ability you have already got for your enterprise. For instance, in case you’re a contract occasions producer, your job is usually advertising and marketing. So, you could possibly declare for a advertising and marketing diploma or perhaps a full CIMA qualification. Nonetheless, you couldn’t resolve you needed to vary careers as a bricklayer and rely that course as an allowable expense.
This nonetheless leaves your alternative base fairly broad, particularly in case you’re a sole dealer. For instance, let’s say you’re a contract author – plenty of writers profit from studying tips on how to use graphic design software program. So, a web based Photoshop course might rely. Or, any business-related course resembling a bookkeeping qualification will even qualify for any sole dealer, as they want these abilities to construct and keep their enterprise.
Attending commerce conferences and occasions additionally counts as continued skilled schooling – so be sure you put your ticket prices down as an allowable expense, too!
Journey and Autos
In the event you commute usually to an workplace, you’ll be able to’t declare these prices as an expense. Every part else although is a good huge tick within the Sure You Can Declare column!
Practice, bus, even air fares all rely in case you’re travelling wholly and solely for enterprise functions. In the event you purchase a automobile solely for your enterprise, you’ll be able to rely the acquisition as a capital expense (or the lease charges as an allowable expense). All MOT, insurance coverage, servicing, repairs, parking, and gasoline is allowed, too.
In the event you use your private automobile to journey for work, you’ll be able to declare mileage prices. That is based mostly on the HMRC mileage charges which is about pretty excessive so ought to cowl gasoline 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 must ask your self if it’s used ‘wholly and solely’ for enterprise use. Listed below are some examples you might come throughout – all of it is determined by 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 could possibly declare for different issues – together with shopping for books and newspapers, and even subscriptions like Netflix and Spotify?!
You must show an actual enterprise use. Taking part in Netflix when you’re working for ‘workplace leisure’ doesn’t rely! Nonetheless, if you’re – for instance – an actor or budding movie director, you could possibly justify the subscription as a analysis instrument. The identical goes for Spotify in case you’re a musician or podcaster, and even issues like Twitch in case you’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, if you’re – for instance – a sports activities mannequin, it’s your job to maintain match and keep wanting 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 is predicated primarily in your look – i.e., you’re a mannequin or an actor – you could possibly strive claiming prices for hair and sweetness remedies. You’ll want to have the ability to show, if questioned, that the expense was a authentic enterprise declare although!
Motels
Travelling anyplace for enterprise conferences or occasions usually means going a great distance from residence. 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’ll be able to solely declare the nights that had been required on your assembly.
In a single day meals
Like inns, in case you’re travelling away out of your main workplace for an in a single day or prolonged journey, you’ll be able to 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 will’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 may be 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 profit from the tax reduction on supply – which means free cash on 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 assert for safety prices to your enterprise premises – in case your canine is taken into account a guard canine, technically you’ll be able to declare for his or her buy, repairs, vet payments and meals! Nonetheless, at all times keep in mind that HMRC might audit you at any time – so in case you’re pondering of itemizing your chihuahua as a guard canine, perhaps assume twice…
