Expenses if you're self-employed: Overview - GOV.UK

Example Your turnover is £40,000, and you claim £10,000 in allowable expenses. You only pay tax on the remaining £30,000 - known as your taxable profit. Skiptomaincontent CookiesonGOV.UK Weusesomeessentialcookiestomakethiswebsitework. We’dliketosetadditionalcookiestounderstandhowyouuseGOV.UK,rememberyoursettingsandimprovegovernmentservices. Wealsousecookiessetbyothersitestohelpusdelivercontentfromtheirservices. Acceptadditionalcookies Rejectadditionalcookies Viewcookies Youcanchangeyourcookiesettingsatanytime. Hidethismessage Home Businessandself-employed Businesstax Expensesifyou'reself-employed Skiptocontentsofguide Contents Overview Office,propertyandequipment Car,vanandtravelexpenses Clothingexpenses Staffexpenses Resellinggoods Legalandfinancialcosts Marketing,entertainmentandsubscriptions Trainingcourses Howtoclaim Overview Ifyou’reself-employed,yourbusinesswillhavevariousrunningcosts.Youcandeductsomeofthesecoststoworkoutyourtaxableprofitaslongasthey’reallowableexpenses. Example Yourturnoveris£40,000,andyouclaim£10,000inallowableexpenses.Youonlypaytaxontheremaining£30,000-knownasyourtaxableprofit. Allowableexpensesdonotincludemoneytakenfromyourbusinesstopayforprivatepurchases. Ifyourunyourownlimitedcompany,youneedtofollowdifferentrules.Youcandeductanybusinesscostsfromyourprofitsbeforetax.Youmustreportanyitemyoumakepersonaluseofasacompanybenefit. Costsyoucanclaimasallowableexpenses Theseinclude: officecosts,forexamplestationeryorphonebills travelcosts,forexamplefuel,parking,trainorbusfares clothingexpenses,forexampleuniforms staffcosts,forexamplesalariesorsubcontractorcosts thingsyoubuytosellon,forexamplestockorrawmaterials financialcosts,forexampleinsuranceorbankcharges costsofyourbusinesspremises,forexampleheating,lighting,businessrates advertisingormarketing,forexamplewebsitecosts trainingcoursesrelatedtoyourbusiness,forexamplerefreshercourses Youcannotclaimexpensesifyouuseyour£1,000tax-free‘tradingallowance’. ContacttheSelfAssessmenthelplineifyou’renotsurewhetherabusinesscostisanallowableexpense. Costsyoucanclaimascapitalallowances Ifyouusetraditionalaccounting,claimcapitalallowanceswhenyoubuysomethingyoukeeptouseinyourbusiness,forexample: equipment machinery businessvehicles,forexamplecars,vans,lorries Youcannotclaimcapitalallowancesifyouuseyour£1,000tax-free‘tradingallowance’. Ifyouusecashbasis Ifyouusecashbasisaccountingandbuyacarforyourbusiness,youcanclaimthisasacapitalallowance.However,allotheritemsyoubuyandkeepforyourbusinessshouldbeclaimedasallowableexpensesinthenormalway. Ifyouusesomethingforbothbusinessandpersonalreasons Youcanonlyclaimallowableexpensesforthebusinesscosts. ExampleYourmobilephonebillsfortheyeartotal£200.Ofthis,youspend£130onpersonalcallsand£70onbusiness. Youcanclaimfor£70ofbusinessexpenses. Ifyouworkfromhome Youmaybeabletoclaimaproportionofyourcostsforthingslike: heating electricity CouncilTax mortgageinterestorrent internetandtelephoneuse You’llneedtofindareasonablemethodofdividingyourcosts,forexamplebythenumberofroomsyouuseforbusinessortheamountoftimeyouspendworkingfromhome. ExampleYouhave4roomsinyourhome,oneofwhichyouuseonlyasanoffice. Yourelectricitybillfortheyearis£400.Assumingalltheroomsinyourhomeuseequalamountsofelectricity,youcanclaim£100asallowableexpenses(£400dividedby4). Ifyouworkedonlyonedayaweekfromhome,youcouldclaim£14.29asallowableexpenses(£100dividedby7). Simplifiedexpenses Youcanavoidusingcomplexcalculationstoworkoutyourbusinessexpensesbyusingsimplifiedexpenses.Simplifiedexpensesareflatratesthatcanbeusedfor: vehicles workingfromhome livingonyourbusinesspremises Next : Office,propertyandequipment Viewaprintableversionofthewholeguide Relatedcontent Businessrecordsifyou'reself-employed SelfAssessmenttaxreturns Simplifiedexpensesifyou'reself-employed Cashbasis Claimtaxreliefforyourjobexpenses Explorethetopic Businesstax Self-employment Isthispageuseful? Maybe Yesthispageisuseful Nothispageisnotuseful Thankyouforyourfeedback Reportaproblemwiththispage Close HelpusimproveGOV.UK Don’tincludepersonalorfinancialinformationlikeyourNationalInsurancenumberorcreditcarddetails. Thisfieldisforrobotsonly.Pleaseleaveblank Whatwereyoudoing? Whatwentwrong? Send Close HelpusimproveGOV.UK TohelpusimproveGOV.UK,we’dliketoknowmoreaboutyourvisittoday.We’llsendyoualinktoafeedbackform.Itwilltakeonly2minutestofillin.Don’tworrywewon’tsendyouspamorshareyouremailaddresswithanyone. Emailaddress Sendmethesurvey