What Expenses Can You Claim as Self-Employed?

If you're self-employed in the UK, claiming allowable expenses reduces your taxable profit — and your tax bill. But knowing what counts as a legitimate business expense isn't always obvious.

This guide covers the main categories of allowable expenses, how to handle mixed personal and business use, and when simplified flat rates might work better for you.

What Are Allowable Expenses?

Allowable expenses are costs you incur "wholly and exclusively" for your business. You deduct these from your income before calculating tax, which means every £1 of legitimate expenses saves you tax at your marginal rate.

Important: You cannot claim expenses if you use the £1,000 trading allowance. It's one or the other — if your expenses exceed £1,000, claim actual expenses instead.

Categories of Allowable Expenses

Office and Administrative Costs

You can claim:

• Stationery, printer ink, and office supplies
• Phone bills (business portion)
• Postage and courier costs
• Software subscriptions used for work
• Internet costs (business portion)

You cannot claim personal phone usage or non-business subscriptions.

Travel and Vehicles

You can claim:

• Fuel, parking, and road tolls for business journeys
• Train, bus, and taxi fares
• Vehicle insurance, repairs, and servicing (business portion)
• Hotel accommodation for business trips
• Meals on overnight business trips

You cannot claim:

• Commuting between home and a regular workplace
• Parking or speeding fines
• Non-business travel

Note: For vehicles, you can either claim actual costs (with records) or use simplified mileage rates. See the simplified expenses section below.

Working From Home

If you work from home, you can claim a proportion of:

• Heating and electricity
• Council Tax
• Mortgage interest or rent
• Internet and phone bills

The key is calculating a fair business proportion based on space and time.

Clothing

You can claim:

• Uniforms with your business logo
• Protective clothing (safety boots, hard hats, overalls)
• Costumes for performers

You cannot claim everyday clothing, even if you only wear it for work. A suit bought for client meetings isn't allowable.

Staff Costs

You can claim:

• Employee salaries and wages
• Employer's National Insurance contributions
• Pension contributions
• Agency fees for temporary staff
• Payments to subcontractors

Stock and Materials

You can claim:

• Goods bought for resale
• Raw materials for products you make
• Direct costs of producing goods or services

Financial and Legal Costs

You can claim:

• Accountant fees
• Solicitor fees for business matters
• Bank charges and interest on business loans
• Professional indemnity insurance
• Lease payments for equipment

You cannot claim:

• Costs of buying property or equipment (these are capital allowances, not expenses)
• Personal legal costs
• Fines or penalties

Marketing and Advertising

You can claim:

• Advertising in newspapers, online, or print
• Website hosting and domain costs
• Business cards and flyers
• Free samples given to potential customers

You cannot claim client entertainment (meals, event tickets, gifts over £50).

Professional Development

You can claim:

• Training courses that update or improve existing skills
• Professional journal subscriptions
• Trade association memberships

You cannot claim training for a completely new trade or business area.

Handling Mixed Personal and Business Use

Many expenses have both personal and business elements. HMRC expects you to calculate a fair proportion.

Example: Mobile Phone

Your annual phone bill is £200. You estimate 35% is business use.

Allowable expense: £200 × 35% = £70

Example: Home Office

You have a 4-room home and use one room exclusively as an office. Your annual electricity bill is £1,200.

Basic calculation: £1,200 ÷ 4 rooms = £300

But if you only work from home 3 days a week:

Adjusted calculation: £300 × (3 ÷ 7) = £128

Keep a record of how you calculated the proportion — HMRC may ask.

Simplified Expenses: Flat Rate Alternative

Instead of tracking actual costs, you can use HMRC's flat rates for three categories:

Vehicle Mileage Rates

Miles per year	Rate per mile
First 10,000	45p
Over 10,000	25p
Motorcycles	24p (all miles)

Example: You drive 12,000 business miles in a year.

• First 10,000 × 45p = £4,500
• Next 2,000 × 25p = £500
• Total claim: £5,000

Important: Once you claim capital allowances on a vehicle, you cannot switch to simplified mileage for that vehicle.

Working From Home Flat Rates

Hours worked from home per month	Monthly amount
25–50 hours	£10
51–100 hours	£18
101+ hours	£26

Example: You work from home 30 hours per week (approximately 130 hours/month).

Annual claim: £26 × 12 = £312

These rates are simple but often lower than actual proportional costs. Use HMRC's simplified expenses checker to compare.

Living at Business Premises

If you live above your shop or in your business premises:

Number of occupants	Monthly flat rate
1 person	£350
2 people	£500
3+ people	£650

This covers the personal portion of bills — you claim the rest as business expenses.

What You Cannot Claim

Some costs are never allowable, regardless of how business-related they seem:

• Client entertainment — meals, drinks, event tickets for clients
• Everyday clothing — even if bought specifically for work
• Fines and penalties — parking tickets, late payment charges
• Donations to charity — these get relief differently
• Personal drawings — money you take from the business for yourself

Record Keeping

HMRC requires you to keep records of all business expenses. For each expense, retain:

• Receipts or invoices
• Bank or credit card statements
• Mileage logs (if claiming vehicle expenses)
• Calculation notes for proportional claims

Keep records for at least 5 years after the 31 January submission deadline for that tax year.

Simplified vs Actual: Which Is Better?

Factor	Simplified expenses	Actual costs
Record keeping	Easier — just track miles/hours	More detailed records needed
Best for	Low actual costs, simple businesses	High actual costs, significant expenses
Flexibility	Fixed rates	Claim what you actually spend
Switching	Can switch methods each year (except vehicles with capital allowances)	Can switch to simplified

Use HMRC's online checker to compare before deciding.

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This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.

Official Sources

• Expenses if you're self-employed — GOV.UK
• Simplified expenses if you're self-employed — GOV.UK
• Simplified expenses checker — GOV.UK
• Capital allowances — GOV.UK