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 embrace as a official expense -and what is going to HMRC refuse?
Let’s take a look at what you’ll be able to – and might’t – embrace as an allowable expense in your Self Evaluation. This information is for sole merchants – taxes for Restricted Corporations, PLCs, and charities are completely different.
The Buying and selling Allowance
The Buying and selling Allowance is ideal for those who flip over lower than £1,000 a 12 months along with your self-employment. For instance, for those who occassionally babysit or do some backyard chores, or you probably have a small enterprise that’s simply getting began.
You don’t should register as self-employed with HMRC for those who flip over £1,000 or much less in a tax 12 months. Nevertheless, you’ll be able to’t declare bills for those who do it this manner. So, for those who flip over £1,000 however your bills value £500, you’ll be able to’t write off that £500 to maximise your income. In the event you assume you’ll flip over greater than £1,000, otherwise you need 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 all the things on what you are promoting account as an expense in your Self Evaluation, maintain up! Chances are you’ll have to 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 all the value. You’ll be able to, nevertheless, declare the journey required to get to the convention, and the lodge one evening 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 personal pocket.
Private Use Gadgets Used for Enterprise
Generally, particularly whenever 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, whenever you’re first working your freelance enterprise.
You’ll be able to’t declare the total invoice – however you’ll be able to work out the cheap portion of the price 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 assert.
Simplified vs Precise Bills
In the event you run a low-overhead enterprise, your prices might are available in at underneath £1000 a 12 months. If so, you’ll be able to declare utilizing ‘simplified bills’ for some issues. This contains the enterprise use of autos, value of working from residence, and dwelling in what you are promoting premises. The whole lot else must be labored out as precise prices.
Simplified bills saves you a giant headache! You utilize flat fee bills set by HMRC to make approximated expense claims, quite 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 fee for working from residence, for instance, is £10 monthly for between 25-50 hours a month, £18 for 51-100 hours, and £26 for 101+ hours a month. This could internet you greater than understanding precise bills (see under).
Conventional vs Money Foundation Accounting
Determine if you wish to observe the standard or money foundation accounting choices. Conventional accounting is the place you depend the invoices despatched out that month – not essentially the cash acquired. This may be helpful whenever you’re establishing you probably have loads of stock or lengthy cost phrases, as you’ll be capable to offset unpaid invoices.
Money foundation accounting is usually easier for sole merchants to make use of, although. It solely takes under consideration the cash you’ve truly acquired in that tax 12 months, and the precise bills incurred.
Whichever foundation you utilize, be sure to preserve ALL RECEIPTS for a minimum of seven years. Additionally, you will should 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 can make the quarterly returns required a lot simpler.
Working from Residence vs Renting Workplace Area
Many freelancers work at home – both for value causes or private desire. Others prefer 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 residence as an allowable expense in your tax return. You’ll be able to’t, sadly, expense your total Council Tax or electrical energy payments – however you’ll be able to expense a few of them.
Rooms you’ll be able to embrace
Use the variety of rooms in your house for the calculations. You’ll be able to embrace dwelling areas, bedrooms, kitchens, workplace areas, even garages for those who work in it. You’ll be able to’t use lobbies, porches, hallways (together with mezzanine areas) – however you probably have a backyard room that’s in your important energy provide, you’ll be able to embrace that.
Depend what number of rooms you could have in your house. Divide your month-to-month payments complete by the variety of rooms you’ve acquired. Say your payments come to £350 and you’ve got 5 rooms – that’s £70 a room. Then, take 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 value £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 you probably have a devoted residence workplace, be sure to use it for private use one way or the other. This might be storing private objects in it or typically watching a movie in your laptop computer in there. Why?
Capital Beneficial properties Tax! In the event you promote your private 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 quite than only one room’s use!
Payments you’ll be able to expense
Calculate each invoice: hire or mortgage curiosity (not complete mortgage repayments), electrical energy, gasoline, Council Tax, water. Your phone and broadband payments will be labored out on a proportion utilization quite than room calculations, for those who don’t have devoted enterprise telephones and broadband.
Workplace Tools and Furnishings
Do you utilize a particular desk, chair, or submitting cupboard? Have you ever bought bulbs for the lamp in your desk? Maybe you’ve acquired a noticeboard on the wall on your necessary paperwork and reminders.
Something that you just purchase that’s wholly and solely for what you are promoting will be claimed. If there’s any private use – reminiscent of 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 price.
Energy cables, surge protectors, monitor risers: all the things and something you utilize to equip your workplace area will be included.
This additionally contains enterprise bills reminiscent of postage, envelopes, printer ink, paper, and stationery. You too can 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 particular cell phone for work?
You’ll be able to low cost all these prices as an allowable expense! Nevertheless, it is best to make certain it counts as an allowable expense quite than a capital expenditure. An allowable expense is one thing you’ll use for lower than two years – reminiscent of hire, payments, and stationery. In the event you use money foundation accounting, computer systems are allowable bills, too. Nevertheless, for those who use conventional accounting, gear is a capital allowance.
As with the opposite issues, for those who use your laptop or cell phone for private use, you must declare proportionately.
Contractor Bills and Skilled Charges
“You need to spend cash to earn money” is admittedly very true in terms of launching and sustaining a self-employed enterprise.
The most effective investments you may make in what you are promoting is getting the appropriate individuals to do every activity for you. Whereas many self-employed individuals operating their very own enterprise are concurrently accountant, marketer, gross sales particular person, doer-of-the-actual-thing, social media government – it’s truly higher to rent individuals for those who can.
You’ll be able to offset the price of skilled charges, reminiscent of accountants and solicitors, as an allowable expense. Utilizing knowledgeable will prevent a LOT of time and make it easier to keep away from doubtlessly large (and expensive) complications sooner or later.
In the event you want a serving to hand to assist run a stand at an exhibition, otherwise you need to pay somebody to run your social media, these prices fall underneath allowable bills, too. That is completely different to having an worker: you need to use contractors right here, quite than rent somebody on payroll. If you’d like an worker, you’ll should be a Restricted Firm and make employer Nationwide Insurance coverage and pension contributions. Utilizing contractors means you pay the set payment on the bill with out the above prices.
Banking Charges
Sole merchants don’t HAVE to have a separate checking account – nevertheless 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, quite than a enterprise account, which frequently means no banking prices.
Nevertheless, in order for you 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’ll be able to offset month-to-month charges as an allowable expense. You too can declare overdraft prices, 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 indicate you’ve tried to get better the cash first, but when there’s no luck (reminiscent of your buyer has gone bankrupt) you’ll be able to 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 shoppers. In the event 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 the event you’re a member of knowledgeable organisation or union, you’ll be able to usually embrace skilled indemnity insurance coverage in your membership, so it’s price checking the effective print earlier than you’re taking out a separate coverage.
Advertising and marketing Prices
You’ll be able to’t run a enterprise for those who don’t shout about it! The whole lot you do to market what you are promoting can depend in the direction of allowable bills.
So, whenever 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! If in case you have a product to promote, sending free samples to reviewers is classed as advertising and marketing.
Attending an occasion? Get branded objects from Vistaprint like pens, stress balls, keyrings, and all the things else you should give away as tempting freebies – all of them depend as a official advertising and marketing expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to record what you are promoting in a listing, and your unsolicited mail prices.
Alas, taking potential shoppers out for dinner doesn’t depend as advertising and marketing. ‘Shopper leisure’ isn’t an allowable expense. If, nevertheless, 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 too can cost subsistence for drinks and meals to an affordable quantity if you’re working away out of your traditional place of business, reminiscent of if you must go to a distinct metropolis for a convention.
Clothes and Uniforms
Do you need to get t-shirts along with your brand on? What about branded hoodies from Vistaprint? Maybe you need to put on a wise uniform that’s solely used on your line of labor, reminiscent of for those who run your personal cleansing enterprise. Or, for those who want particular clothes reminiscent of steel-capped security boots, these will be claimed.
You’ll be able to declare branded clothes as a advertising and marketing expense. You too can declare uniform prices – and you may declare laundry prices for uniforms, too.
You’ll be able to’t, nevertheless, declare for garments that you just’d put on usually at residence. Or perhaps a enterprise swimsuit for conferences for those who’re often in denims and a hoodie! The rule with clothes may be very a lot that it both has to depend as advertising and marketing (i.e., branded) OR used as a uniform ‘wholly and solely’ for what you are promoting.
The one exception to claiming for clothes that isn’t task- or uniform-specific is for performers like actors. They usually 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 embrace issues like commerce magazines in your allowable bills, plus membership to recognised business 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, for those who’re a contract occasions producer, your job is generally advertising and marketing. So, you would declare for a advertising and marketing diploma or perhaps a full CIMA qualification. Nevertheless, you couldn’t resolve you wished to vary careers as a bricklayer and depend that course as an allowable expense.
This nonetheless leaves your alternative base fairly broad, particularly for those who’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 reminiscent of a bookkeeping qualification may even qualify for any sole dealer, as they want these expertise 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 the event you commute often to an workplace, you’ll be able to’t declare these prices as an expense. The whole lot else although is a superb massive tick within the Sure You Can Declare column!
Prepare, bus, even air fares all depend for those who’re travelling wholly and solely for enterprise functions. In the event you purchase a automobile solely for what you are promoting, you’ll be able to 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 the event you use your private automobile to journey for work, you’ll be able to declare mileage prices. That is primarily based 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. You should 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 utilize 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?!
You should show an actual enterprise use. Taking part in Netflix whilst you’re working for ‘workplace leisure’ doesn’t depend! Nevertheless, 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 for those who’re a musician or podcaster, and even issues like Twitch for those who’re a gamer making an attempt to make an revenue from streaming.
Fitness center 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 wanting wholesome. In the event you’re a private coach, fitness center gear counts as an allowable expense, too.
Haircuts and sweetness remedies
In case your job relies primarily in your look – i.e., you’re a mannequin or an actor – you would strive claiming prices for hair and sweetness remedies. You’ll want to have the ability to show, if questioned, that the expense was a official enterprise declare although!
Resorts
Travelling anyplace for enterprise conferences or occasions usually means going a great distance from residence. You’re entitled to assert your lodging value as an allowable expense in case your journey is 100% enterprise associated. In the event you select to increase your journey, you’ll be able to solely declare the nights that had been required on your assembly.
In a single day meals
Like resorts, for those who’re travelling away out of your main 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 price should appear cheap.
Pensions
We are able to’t stress this sufficient: contribute to your pension! Self-employed individuals usually 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 complete annual contributions right here, because it means you’ll take advantage of the tax aid on supply – which means free cash on your pension pot!
Guard canine
One of many funniest claims we’ve heard of being accepted by HMRC is a guard canine. You’re entitled to assert 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, repairs, vet payments and meals! Nevertheless, all the time do not forget that HMRC might audit you at any time – so for those who’re considering of itemizing your chihuahua as a guard canine, possibly assume twice…
