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 revenue for the tax 12 months – and your allowable bills. However what are you able to embody as a legit expense -and what is going to HMRC refuse?
Let’s have a look at what you’ll be able to – and may’t – embody 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 when you flip over lower than £1,000 a 12 months together with your self-employment. For instance, when you occassionally babysit or do some backyard chores, or when you’ve got a small enterprise that’s simply getting began.
You don’t must register as self-employed with HMRC when you flip over £1,000 or much less in a tax 12 months. Nonetheless, you’ll be able to’t declare bills when you do it this fashion. So, when 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 case you suppose you’ll flip over greater than £1,000, otherwise you wish to offset your bills towards your revenue, it’s best to register as self-employed with HMRC.
Wholly and Completely Defined
Earlier than you begin throwing the whole lot on what you are promoting account as an expense in your Self Evaluation, maintain up! You could 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 ebook a two-week vacation to attend a one-day convention and declare your complete price. You’ll be able to, nonetheless, declare the journey required to get to the convention, and the lodge one evening earlier than (and even after, relying on the space from dwelling and journey necessities). The remainder of your lodging and journey bills – i.e., your vacation – should come out of your personal pocket.
Private Use Gadgets 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’ll be able to’t declare the complete invoice – however you’ll be able to work out the affordable portion of the fee that’s used within the line of enterprise. For instance, you would 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 say.
Simplified vs Precise Bills
In case you run a low-overhead enterprise, your prices might are available at underneath £1000 a 12 months. If that is so, you’ll be able to declare utilizing ‘simplified bills’ for some issues. This contains the enterprise use of autos, price of working from dwelling, and dwelling in what you are promoting premises. All the pieces else must be labored out as precise prices.
Simplified bills saves you an enormous headache! You employ flat price bills set by HMRC to make approximated expense claims, reasonably 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 dwelling, for instance, is £10 per 30 days for between 25-50 hours a month, £18 for 51-100 hours, and £26 for 101+ hours a month. This will internet you greater than understanding precise bills (see beneath).
Conventional vs Money Foundation Accounting
Determine if you wish to observe 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 establishing when you’ve got a whole lot of stock or lengthy cost phrases, as you’ll be capable of offset unpaid invoices.
Money foundation accounting is commonly less complicated for sole merchants to make use of, although. It solely takes into consideration the cash you’ve really acquired in that tax 12 months, and the precise bills incurred.
Whichever foundation you employ, ensure you preserve ALL RECEIPTS for at the very least 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 can make the quarterly returns required a lot simpler.
Working from Residence vs Renting Workplace House
Many freelancers work at home – both for price causes or private choice. 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’ll be able to declare some prices incurred by working from dwelling as an allowable expense in your tax return. You’ll be able to’t, sadly, expense your complete Council Tax or electrical energy payments – however you’ll be able to expense a few of them.
Rooms you’ll be able to embody
Use the variety of rooms in your house for the calculations. You’ll be able to embody dwelling areas, bedrooms, kitchens, workplace areas, even garages when you work in it. You’ll be able to’t use lobbies, porches, hallways (together with mezzanine areas) – however when you’ve got a backyard room that’s in your primary energy provide, you’ll be able to embody that.
Rely what number of rooms you’ve 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 employ 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 when you’ve got a devoted dwelling workplace, ensure you use it for private use someway. This might be storing private gadgets in it or generally watching a movie in your laptop computer in there. Why?
Capital Good points Tax! In case 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 proportion time reasonably 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 may be labored out on a proportion utilization reasonably than room calculations, when you don’t have devoted enterprise telephones and broadband.
Workplace Gear and Furnishings
Do you employ a selected 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 in your necessary paperwork and reminders.
Something that you just purchase that’s wholly and solely for what you are promoting may be claimed. If there’s any private use – equivalent to an workplace chair you sit on to observe YouTube in your lunch break – low cost the proportion of time you employ it for private actions towards the fee.
Energy cables, surge protectors, monitor risers: the whole lot and something you employ to equip your workplace house may be included.
This additionally contains enterprise bills equivalent to postage, envelopes, printer ink, paper, and stationery. You may as well embody software program purchases – together with month-to-month subscriptions to issues like Dropbox or Workplace 365.
Computer systems and Expertise
Do you employ a desk with a PC and screens? A laptop computer raised up on a stand? A selected cell phone for work?
You’ll be able to low cost all these prices as an allowable expense! Nonetheless, it’s best to ensure it counts as an allowable expense reasonably than a capital expenditure. An allowable expense is one thing you’ll use for lower than two years – equivalent to hire, payments, and stationery. In case you use money foundation accounting, computer systems are allowable bills, too. Nonetheless, when you use conventional accounting, gear is a capital allowance.
As with the opposite issues, when you use your laptop or cell phone for private use, it’s a must to declare proportionately.
Contractor Bills and Skilled Charges
“You need to spend cash to make cash” is de facto very true relating to launching and sustaining a self-employed enterprise.
Top-of-the-line investments you may make in what you are promoting 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 individual, doer-of-the-actual-thing, social media govt – it’s really higher to rent folks when you can.
You’ll be able to offset the price of skilled charges, equivalent to accountants and solicitors, as an allowable expense. Utilizing an expert will prevent a LOT of time and show you how to keep away from doubtlessly large (and dear) complications sooner or later.
In case you want a serving to hand to assist run a stand at an exhibition, otherwise you wish to pay somebody to run your social media, these prices fall underneath allowable bills, too. That is totally different to having an worker: you will need to use contractors right here, reasonably than rent somebody on payroll. If you need 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 price 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 should utilize a present account, reasonably than a enterprise account, which regularly 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 as well 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 better the cash first, but when there’s no luck (equivalent to 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 purchasers. In case you run exhibition stands or folks go to your premises, you’ll additionally want public legal responsibility insurance coverage by legislation. These prices all rely for allowable bills.
In case you’re a member of an expert organisation or union, you’ll be able to typically embody skilled indemnity insurance coverage in your membership, so it’s price checking the nice print earlier than you’re taking out a separate coverage.
Advertising Prices
You’ll be able to’t run a enterprise when you don’t shout about it! All the pieces you do to market what you are promoting can rely in 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! When you’ve got a product to promote, sending free samples to reviewers is classed as advertising.
Attending an occasion? Get branded gadgets from Vistaprint like pens, stress balls, keyrings, and the whole lot else it’s essential give away as tempting freebies – all of them rely as a legit advertising expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to listing what you are promoting in a listing, and your junk mail prices.
Alas, taking potential purchasers out for dinner doesn’t rely as advertising. ‘Shopper leisure’ isn’t an allowable expense. If, nonetheless, 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 cost in sort. You may as well cost subsistence for drinks and meals to an affordable quantity if you’re working away out of your standard place of business, equivalent to if it’s a must to go to a special metropolis for a convention.
Clothes and Uniforms
Do you wish to get t-shirts together with your emblem on? What about branded hoodies from Vistaprint? Maybe you wish to put on a sensible uniform that’s solely used in your line of labor, equivalent to when you run your personal cleansing enterprise. Or, when you want particular clothes equivalent to steel-capped security boots, these may be claimed.
You’ll be able to declare branded clothes as a advertising expense. You may as well declare uniform prices – and you may declare laundry prices for uniforms, too.
You’ll be able to’t, nonetheless, declare for garments that you just’d put on usually at dwelling. Or perhaps a enterprise swimsuit for conferences when you’re normally in denims and a hoodie! The rule with clothes could be very a lot that it both has to rely as advertising (i.e., branded) OR used as a uniform ‘wholly and solely’ for what you are promoting.
The one exception to claiming for clothes that’s not task- or uniform-specific is for performers like actors. They typically 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 fascinating one. You’ll be able to embody issues like commerce magazines in your allowable bills, plus membership to recognised trade organisations in the event that they’re associated to what you are promoting.
Additional training additionally counts as an allowable expense if it builds on a talent you have already got for what you are promoting. For instance, when you’re a contract occasions producer, your job is generally advertising. So, you would declare for a advertising diploma or perhaps a full CIMA qualification. Nonetheless, you couldn’t resolve you wished to vary careers as a bricklayer and rely that course as an allowable expense.
This nonetheless leaves your alternative base fairly broad, particularly when you’re a sole dealer. For instance, let’s say you’re a contract author – numerous writers profit from studying easy methods to use graphic design software program. So, an internet Photoshop course may rely. Or, any business-related course equivalent to a bookkeeping qualification may 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 training – so ensure you put your ticket prices down as an allowable expense, too!
Journey and Automobiles
In case you commute frequently to an workplace, you’ll be able to’t declare these prices as an expense. All the pieces else although is a superb large tick within the Sure You Can Declare column!
Prepare, bus, even air fares all rely when you’re travelling wholly and solely for enterprise functions. In case you purchase a car solely for what you are promoting, 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 case you use your private automotive to journey for work, you’ll be able to declare mileage prices. That is based mostly on the HMRC mileage charges which is ready 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. It’s worthwhile to ask your self if it’s used ‘wholly and solely’ for enterprise use. Listed here are some examples it’s possible you’ll come throughout – all of it will depend on your line of labor and whether or not you employ one thing just for what you are promoting 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 would declare for different issues – together with shopping for books and newspapers, and even subscriptions like Netflix and Spotify?!
It’s worthwhile to show an actual enterprise use. Enjoying Netflix whilst you’re working for ‘workplace leisure’ doesn’t rely! Nonetheless, if you’re – for instance – an actor or budding movie director, you would justify the subscription as a analysis instrument. The identical goes for Spotify when you’re a musician or podcaster, and even issues like Twitch when you’re a gamer attempting to make an revenue from streaming.
Gymnasium 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 trying wholesome. In case you’re a private coach, health club gear counts as an allowable expense, too.
Haircuts and wonder therapies
In case your job is predicated primarily in your look – i.e., you’re a mannequin or an actor – you would attempt claiming prices for hair and wonder therapies. You’ll want to have the ability to show, if questioned, that the expense was a legit enterprise declare although!
Motels
Travelling wherever for enterprise conferences or occasions typically means going a great distance from dwelling. You’re entitled to say your lodging price as an allowable expense in case your journey is 100% enterprise associated. In case you select to increase your journey, you’ll be able to solely declare the nights that had been required in your assembly.
In a single day meals
Like accommodations, when you’re travelling away out of your major place of business 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 fee should appear affordable.
Pensions
We are able to’t stress this sufficient: contribute to your pension! Self-employed folks typically 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’s one other part that asks you to declare your pension contributions. It’s necessary you embody your whole annual contributions right here, because it means you’ll profit from the tax reduction on provide – which means free cash in 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 say for safety prices to what you are promoting premises – in case your canine is taken into account a guard canine, technically you’ll be able to declare for his or her buy, maintenance, vet payments and meals! Nonetheless, at all times do not forget that HMRC may audit you at any time – so when you’re considering of itemizing your chihuahua as a guard canine, perhaps suppose twice…
