What’s an Allowable Expense on a Self Evaluation?

Moneymagpie Group

twenty third Sep 2025

Studying Time: 12 minutes

Freelancers have to finish a Self Evaluation tax return by January thirty first yearly. This consists of itemizing all of your earnings for the tax 12 months – and your allowable bills. However what are you able to embrace as a reputable expense -and what’s going to HMRC refuse?

Let’s have a look at what you possibly can – and might’t – embrace as an allowable expense in your Self Evaluation. This information is for sole merchants – taxes for Restricted Firms, PLCs, and charities are completely different.

The Buying and selling Allowance

The Buying and selling Allowance is ideal should you flip over lower than £1,000 a 12 months together with your self-employment. For instance, should you occassionally babysit or do some backyard chores, or in case you have a small enterprise that’s simply getting began.

You don’t must register as self-employed with HMRC should you flip over £1,000 or much less in a tax 12 months. Nonetheless, you possibly can’t declare bills should you do it this manner. So, should you flip over £1,000 however your bills price £500, you possibly can’t write off that £500 to maximise your income. In case you suppose you’ll flip over greater than £1,000, otherwise you wish to offset your bills towards your earnings, it’s best to register as self-employed with HMRC.

Wholly and Solely Defined

Earlier than you begin throwing all the things on your corporation account as an expense in your Self Evaluation, maintain up! You might must show to the tax man that your expense was incurred ‘wholly and solely’ within the line of labor.

For instance, you possibly can’t e book a two-week vacation to attend a one-day convention and declare the whole price. You may, nonetheless, declare the journey required to get to the convention, and the resort one night time earlier than (and even after, relying on the space from residence and journey necessities). The remainder of your lodging and journey bills – i.e., your vacation – should come out of your individual pocket.

Private Use Gadgets Used for Enterprise

Generally, particularly while you’re beginning out, you’ll use private stuff within the line of enterprise. You would possibly use your cell phone, for instance, or your laptop computer, while you’re first working your freelance enterprise.

You may’t declare the total invoice – however you possibly can work out the cheap portion of the associated 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 beneath £1000 a 12 months. If that is so, you possibly can declare utilizing ‘simplified bills’ for some issues. This consists of the enterprise use of autos, price of working from residence, and residing in your corporation premises. Every little thing else must be labored out as precise prices.

Simplified bills saves you a giant headache! You employ flat charge 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). Try the Gov.uk web site for extra particulars about simplified bills.

The flat charge for working from residence, for instance, is £10 per thirty days for between 25-50 hours a month, £18 for 51-100 hours, and £26 for 101+ hours a month. This will web you greater than understanding precise bills (see under).

Conventional vs Money Foundation Accounting

Resolve if you wish to comply with the normal or money foundation accounting choices. Conventional accounting is the place you depend the invoices despatched out that month – not essentially the cash obtained. This may be helpful while you’re organising in case you have a whole lot of stock or lengthy cost phrases, as you’ll have the ability to offset unpaid invoices.

Money foundation accounting is usually less complicated for sole merchants to make use of, although. It solely takes under consideration the cash you’ve truly obtained in that tax 12 months, and the precise bills incurred.

Whichever foundation you utilize, be sure to maintain ALL RECEIPTS for at the least seven years. Additionally, you will have to be ready for Making Tax Digital, which begins rolling out from April 2026 for these with a turnover of £50,000 or above. So, take into account getting a enterprise checking account with built-in HMRC-approved MTD software program like Freeagent or Xero. This may 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 may declare some prices incurred by working from residence as an allowable expense in your tax return. You may’t, sadly, expense your complete Council Tax or electrical energy payments – however you possibly can expense a few of them.

Rooms you possibly can embrace

Use the variety of rooms in your house for the calculations. You may embrace residing areas, bedrooms, kitchens, workplace areas, even garages should you work in it. You may’t use lobbies, porches, hallways (together with mezzanine areas) – however in case you have a backyard room that’s in your important energy provide, you possibly can embrace that.

Rely what number of rooms you might have in your house. Divide your month-to-month payments whole by the variety of rooms you’ve obtained. 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 utilize 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 in case you have a devoted residence workplace, be sure to use it for private use in some way. This may very well be storing private gadgets in it or typically watching a movie in your laptop computer in there. Why?

Capital Features Tax! In case you promote your house 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 possibly can 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, should you don’t have devoted enterprise telephones and broadband.

Workplace Tools and Furnishings

Do you utilize a selected desk, chair, or submitting cupboard? Have you ever bought bulbs for the lamp in your desk? Maybe you’ve obtained a noticeboard on the wall to your necessary paperwork and reminders.

Something that you simply purchase that’s wholly and solely for your corporation may be claimed. If there’s any private use – similar to an workplace chair you sit on to observe YouTube in your lunch break – low cost the proportion of time you utilize it for private actions towards the associated fee.

Energy cables, surge protectors, monitor risers: all the things and something you utilize to equip your workplace house may be included.

This additionally consists of enterprise bills similar to postage, envelopes, printer ink, paper, and stationery. You can even embrace software program purchases – together with month-to-month subscriptions to issues like Dropbox or Workplace 365.

Computer systems and Expertise

Do you utilize a desk with a PC and screens? A laptop computer raised up on a stand? A selected cell phone for work?

You may low cost all these prices as an allowable expense! Nonetheless, you must be certain that 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 – similar to hire, payments, and stationery. In case you use money foundation accounting, computer systems are allowable bills, too. Nonetheless, should you use conventional accounting, tools is a capital allowance.

As with the opposite issues, should you use your pc or cell phone for private use, you must declare proportionately.

Contractor Bills and Skilled Charges

“You need to spend cash to generate profits” is basically very true in relation to launching and sustaining a self-employed enterprise.

The most effective investments you may make in your corporation is getting the correct individuals to do every activity for you. Whereas many self-employed individuals working their very own enterprise are concurrently accountant, marketer, gross sales particular person, doer-of-the-actual-thing, social media govt – it’s truly higher to rent individuals should you can.

You may offset the price of skilled charges, similar to accountants and solicitors, as an allowable expense. Utilizing an expert will prevent a LOT of time and enable you keep away from probably 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 beneath allowable bills, too. That is completely different to having an worker: you have to use contractors right here, reasonably than rent somebody on payroll. If you would like an worker, you’ll have to 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 may contain direct reporting out of your checking account. You should use a present account, reasonably than a enterprise account, which frequently means no banking fees.

Nonetheless, if you would like entry to enterprise bank cards, loans, and even to work with public organisations, you’ll want a enterprise account. These come at a price – however you possibly can offset month-to-month charges as an allowable expense. You can even declare overdraft fees, bank card curiosity funds, leasing prices, and forex conversion charges.

These utilizing conventional accounting may declare for unhealthy money owed. That is when a buyer hasn’t paid you. You’ll have to point out you’ve tried to recuperate the cash first, but when there’s no luck (similar to your buyer has gone bankrupt) you possibly can write this off towards your income.

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 individuals go to your premises, you’ll additionally want public legal responsibility insurance coverage by regulation. These prices all depend for allowable bills.

In case you’re a member of an expert organisation or union, you possibly can typically embrace skilled indemnity insurance coverage in your membership, so it’s value checking the high quality print earlier than you are taking out a separate coverage.

Advertising and marketing Prices

You may’t run a enterprise should you don’t shout about it! Every little thing you do to market your corporation can depend in direction of allowable bills.

So, while 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! You probably have 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 all the things else it’s worthwhile to give away as tempting freebies – all of them depend as a reputable advertising expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to listing your corporation in a listing, and your unsolicited mail prices.

Alas, taking potential purchasers out for dinner doesn’t depend as advertising. ‘Consumer leisure’ isn’t an allowable expense. If, nonetheless, you meet with somebody to get their recommendation on a enterprise facet 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 form. You can even cost subsistence for drinks and meals to an inexpensive quantity if you’re working away out of your typical place of job, similar to if you must go to a distinct 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 to your line of labor, similar to should you run your individual cleansing enterprise. Or, should you want particular clothes similar to steel-capped security boots, these may be claimed.

You may declare branded clothes as a advertising expense. You can even declare uniform prices – and you may declare laundry prices for uniforms, too.

You may’t, nonetheless, declare for garments that you simply’d put on usually at residence. Or perhaps a enterprise go well with for conferences should you’re often in denims and a hoodie! The rule with clothes may be very a lot that it both has to depend as advertising (i.e., branded) OR used as a uniform ‘wholly and solely’ for your corporation.

The one exception to claiming for clothes that isn’t 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 Training

That is an fascinating one. You may embrace issues like commerce magazines in your allowable bills, plus membership to recognised business organisations in the event that they’re associated to your corporation.

Additional training additionally counts as an allowable expense if it builds on a talent you have already got for your corporation. For instance, should 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 determine you needed to vary careers as a bricklayer and depend that course as an allowable expense.

This nonetheless leaves your alternative base fairly broad, particularly should you’re a sole dealer. For instance, let’s say you’re a contract author – a lot of writers profit from studying learn how to use graphic design software program. So, a web-based Photoshop course might depend. Or, any business-related course similar to a bookkeeping qualification may even qualify for any sole dealer, as they want these abilities to construct and preserve their enterprise.

Attending commerce conferences and occasions additionally counts as continued skilled training – so be sure to put your ticket prices down as an allowable expense, too!

Journey and Automobiles

In case you commute usually to an workplace, you possibly can’t declare these prices as an expense. Every little thing else although is a good huge tick within the Sure You Can Declare column!

Prepare, bus, even air fares all depend should you’re travelling wholly and solely for enterprise functions. In case you purchase a car solely for your corporation, you possibly can depend 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 possibly can 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 Contemplate

There are many different prices that MIGHT be an allowable expense. It is advisable ask your self if it’s used ‘wholly and solely’ for enterprise use. Listed here are some examples you might come throughout – all of it is determined by your line of labor and whether or not you utilize one thing just for your corporation 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 is advisable show an actual enterprise use. Enjoying Netflix when you’re working for ‘workplace leisure’ doesn’t depend! Nonetheless, if you’re – for instance – an actor or budding movie director, you would justify the subscription as a analysis device. The identical goes for Spotify should you’re a musician or podcaster, and even issues like Twitch should you’re a gamer attempting to make an earnings from streaming.

Gymnasium prices

Now, 99.99% of the time this gained’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, fitness center tools counts as an allowable expense, too.

Haircuts and wonder remedies

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 remedies. You’ll want to have the ability to show, if questioned, that the expense was a reputable enterprise declare although!

Lodges

Travelling anyplace for enterprise conferences or occasions typically means going a great distance from residence. 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 possibly can solely declare the nights that had been required to your assembly.

In a single day meals

Like accommodations, should you’re travelling away out of your major place of job for an in a single day or prolonged journey, you possibly can account for in a single day meals. This doesn’t imply going all-out and getting a steak dinner with champagne although – the associated fee should appear cheap.

Pensions

We are able to’t stress this sufficient: contribute to your pension! Self-employed individuals 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 embrace your whole annual contributions right here, because it means you’ll take advantage of the tax aid on provide – that means free cash to 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 your corporation premises – in case your canine is taken into account a guard canine, technically you possibly can declare for his or her buy, maintenance, vet payments and meals! Nonetheless, all the time do not forget that HMRC might audit you at any time – so should you’re pondering of itemizing your chihuahua as a guard canine, perhaps suppose twice…