Understanding the full range of claimable expenses for self-employed business owners is key to lowering your tax bill and increasing your profits. The UK tax system allows many business-related costs to be deducted from your income before tax is calculated. But many self-employed people miss out by not claiming everything they’re allowed.
At Professional Saver, we’ve spent over 40 years helping self-employed professionals with their financial and insurance needs. Our team regularly supports consultants, freelancers, and small business owners in protecting their businesses and managing the financial side of self-employment, including how to handle expenses effectively. Our guide covers the main allowable expenses you can claim on your Self Assessment tax return.
What Counts as an Allowable Expense?
His Majesty’s Revenue and Customs (HMRC) defines allowable expenses as costs that are “wholly and exclusively” for business purposes. This means the expense must be necessary for your business operations and not include any personal element (unless this can be clearly separated).
The distinction is important. You can deduct allowable expenses from your taxable profit, reducing the amount of income tax you pay. But incorrectly claiming personal expenses could result in penalties from HMRC.
Essential Allowable Expenses Every Self-Employed Person Should Claim
When completing your Self Assessment tax return, ensure you claim these core business expenses:
Office and Equipment Costs
These expenses relate to your business premises and the equipment you use in your business:
- Office supplies (stationery, printing, postage)
- Phone and internet costs (business proportion)
- Computer equipment and software
- Office furniture
- Business equipment repairs and replacements
For equipment with dual business and personal use (like your mobile phone), you can only claim the business proportion. Keep detailed records showing how you calculated this split.
Working from Home Claims
If you work from home regularly, you have two options for claiming related business expenses:
1. Simplified Expenses Method
This uses flat rates set by HMRC based on the hours you work from home each month:
| Hours worked at home per month | Monthly allowance |
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101+ | £26 |
Figures drawn from gov.uk
2. Actual Costs Method
This involves calculating the actual business proportion of your household expenses:
- Mortgage interest or rent
- Council tax
- Utilities (gas, electricity, water)
- Internet and phone
- Property insurance
You’ll need to determine a reasonable basis for calculating the business percentage. Typically, this is based on the number of rooms used for business or the proportion of time a room is used for business purposes.
Travel Expenses You Can Claim
Travel for business costs are fully deductible. However, it’s crucial to understand what qualifies as ‘business travel’:
- Travel between business locations (but not regular commuting to a permanent workplace)
- Travel to temporary workplaces
- Public transport fares for business travel
- Parking fees (excluding fines)
- Hotel accommodation and meals during overnight business trips
If you use your personal vehicle for business travel, you can claim using either:
- Mileage allowance – 45p per mile for the first 10,000 miles, then 25p per mile thereafter for cars and vans.
- Actual costs – A proportion of your total vehicle running costs based on business mileage percentage.
Most self-employed people find the mileage allowance simpler to calculate and more beneficial, especially for lower mileage.
Marketing and Professional Services
Costs related to promoting your business and obtaining professional support are allowable expenses:
- Advertising and marketing costs
- Website design and maintenance
- Business cards and brochures
- Professional memberships related to your business
- Accountancy fees
- Legal costs for business purposes
- Professional indemnity insurance and other business insurances
It’s worth noting that while Professional Saver offers exceptional rates on professional indemnity insurance starting from just £54 per year, these premiums are also tax-deductible expenses that reduce your overall tax liability.
How Do Capital Expenses Differ from Allowable Expenses?
Capital expenses are larger purchases that benefit your business over several years. This can include computers, machinery, vehicles, property, and major building work. These business expenses are not part of your everyday running costs.
You can’t deduct capital expenses from your income like regular allowable expenses. Instead, you may be able to claim capital allowances. These let you deduct part of the cost each year. Thanks to the Annual Investment Allowance (AIA), most businesses can deduct up to £1 million of qualifying costs in the year they buy the asset.
Common Business Expenses Self-Employed People Miss
Many self-employed professionals leave money on the table by overlooking these legitimate expenses:
- Bank charges for business accounts
- Interest on business loans
- Training courses to update existing skills (note: training for new skills may be treated as capital expenditure)
- Business books, journals, and subscriptions
- Eye tests for computer users
- Staff entertaining (up to £150 per head annually)
- Protective clothing or uniforms
- Home office furniture
- Software subscriptions
- Cloud storage costs
Maintaining proper records is essential for claiming these business expenses. Consider using accounting software to track expenses throughout the year rather than scrambling at tax return time.
What Expenses Can’t I Claim?
While the list of allowable expenses is extensive, HMRC specifically excludes:
- Personal expenses with no business element
- Entertainment of clients
- Political donations
- Parking fines and penalties
- Clothing that’s not protective wear or uniforms
- Travel between home and your regular workplace
- Drawings or salary taken from the business
How Professional Saver Can Help Self-Employed Business Owners
Managing your tax obligations as a self-employed professional is just one part of protecting your business. At Professional Saver, we specialise in providing tailored insurance solutions that protect you from the unique risks associated with your profession.
Our professional indemnity insurance, public liability insurance, and other specialist covers are designed specifically for self-employed consultants, designers, advisors, and other professionals. Not only are these insurance premiums tax-deductible expenses, but they also provide essential protection for your business.
We can help protect your business with comprehensive, affordable insurance coverage. Get a quote and put your cover in place within minutes.
