When you’re self-employed, calculating your profits for tax purposes can be tricky. To deduct an expense, you must have made it for business use. But this doesn’t mean you can’t deduct something simply because you also use it outside business hours.
You can deduct some of the costs of running your business. You aren't allowed to claim private purchases, even if you've used money taken from your business.
The HMRC defines the allowable expenses the self-employed can claim. We cover a few of them below.
Here are six expenses you may not have realised you can claim for when you’re self-employed.
For many people, working from home is one of the main benefits of being self-employed. But did you know you can also claim expenses to cover the cost of running your business from home? Deductible home costs include things such as heating, lighting and telephone or internet bills.You can claim home office expenses in one of two ways:
You can treat any insurance policies you need, including public or professional liability insurance, as business expenses and deduct the full cost.
Your business won’t survive long without some marketing. Every business uses different tools, but allowable expenses include:
Any uniform or protective equipment such as safety boots, goggles or gloves count as an allowable expense. If you’re an actor or entertainer, you can treat any costumes as a business expense, too.
Training expenses can be a confusing area if you’re self-employed. For tax purposes, there’s a difference between training that’s considered an investment and training that’s an expense.Training or personal development to keep your existing skills up to date counts as an allowable expense. This could be continuing education classes you need to keep your license in say, accounting.But if you want to learn something new, this counts as an investment. You can’t deduct this cost as a business expense. You’d need to claim capital allowances tax relief instead.
For most small businesses, the easiest way of covering the costs of using your vehicle for work is by claiming a flat rate for mileage. You can use the following rates for business travel:
If you’ve already claimed capital allowances for your business vehicle, you can’t claim this flat mileage rate. You’ll need to break down your vehicle expenses in more detail. You can also claim expenses such as parking costs and toll fees as well as allowable expenses for train, bus, air or taxi fares, provided they relate solely to a business trip. Unfortunately, parking fines are not tax-deductible, so watch out.