What expenses can I claim on Self Assessment?

Self Assessment allows you to deduct allowable expenses from your income before calculating your tax liability. The key test for any expense is that it must be incurred wholly and exclusively for the purposes of your trade or profession. Expenses with a dual purpose (personal and business) are generally not deductible unless there is a clearly separable business portion.

The rules differ depending on whether you are a sole trader reporting self-employment income on your return, or a company director reporting personal expenses that your limited company did not reimburse. Most of the following applies primarily to sole traders, but directors can also claim unreimbursed business expenses on the employment pages of their return.

Office and premises costs: If you run a business from a dedicated commercial premises, rent, rates, insurance, and utilities are deductible. If you work from home, you can claim a proportion of relevant household costs. HMRC allows a simplified flat rate of £10 per month for 25 to 50 hours worked at home, £18 per month for 51 to 100 hours, or £26 per month for over 100 hours. Alternatively, you can calculate the actual proportion based on the number of rooms and hours used.

Travel and vehicle costs: Business travel by public transport (train, bus, flights) is fully deductible. If you use your own car for business, you can claim using either the actual costs method or the HMRC approved mileage rates. The approved mileage rates are 45 pence per mile for the first 10,000 business miles in the tax year and 25 pence per mile after that. Motorcycles are 24 pence per mile. Bicycles are 20 pence per mile. You cannot claim for ordinary commuting from your home to a permanent workplace.

Staff costs: Wages, salaries, National Insurance contributions, and pension contributions for employees (and yourself if you pay yourself a salary in a partnership or as a sole trader) are allowable.

Professional and financial costs: Accountant fees, solicitor fees for business matters, bank charges, business insurance, and professional indemnity insurance are all deductible.

Marketing and subscriptions: Advertising, website costs, trade magazine subscriptions, and professional membership fees are deductible where they relate to the business.

Clothing: Specialist protective clothing or a uniform required for work is deductible. Everyday clothing, even if worn only for work, is not.

Equipment and technology: Computers, phones, and other equipment used for business can be claimed. If there is personal use, you can claim only the business proportion. Alternatively, for capital items such as computers and equipment, you can claim the Annual Investment Allowance (up to £1 million) rather than spreading the cost over time.

Food and drink: You cannot claim for normal everyday meals. You can claim for subsistence during a business journey away from your normal base, but it must be genuinely exceptional rather than routine.

Client entertaining: The cost of entertaining clients or suppliers is not tax deductible for income tax purposes, even if it has a business purpose. This is one of the most common areas where founders incorrectly claim deductions.

Pension contributions: Personal pension contributions you make reduce your adjusted net income for tax purposes. They also attract tax relief at your marginal rate, which is either added to your pension by the provider (relief at source) or claimed back through Self Assessment.

Bad debts: If a customer owes you money and you have written it off as unrecoverable, the amount can be claimed as a bad debt expense in your accounts.

The cash basis is available to sole traders with receipts under £150,000. Under the cash basis, you record income when received and expenses when paid, rather than using accruals accounting. This simplifies record-keeping and is the default for most small businesses.

Keep all receipts, invoices, bank statements, and mileage logs to support your expense claims. HMRC may request evidence during an enquiry. Records must be retained for at least five years after the 31 January filing deadline for the relevant year.