In general anything you spend which is exclusively for your business is allowable for tax purposes..

Self Employed Expenses

The expenditure may be ‘revenue’ which relates to the day to day running of your business or ‘capital’ which is something bought for long term use such as a computer, van, desk etc.

Problems occur when the expense has a dual purpose,this is an expense which is used both for business and personal purposes. Generally such expenditure is not allowable for example clothing bought primarily for business with some private us is not allowed. However, some dual expenses may have a part which is wholly and exclusively for business. An example would be the purchase of a computer which is used 70% for business and 30% for personal use, even though there is a dual aspect here, the 70% relating to business use can be claimed. Special rules apply in these circumstances.

It is vital that you keep receipts for all expenditure and you keep clear records of what the expense was for.Maintaining a spreadsheet of income and outgoings would be useful. Should you be subject to an HMRC enquiry into your Tax Return you must be able to substantiate all expenditure.

The expenses that you can claim include:
General Expenses

Postage and stationery;
Premises costs, this can include a proportion of household bills if you work from home;
Insurance;
Professional subscriptions;
The cost of maintaining your skills and knowledge through training, publications etc;
Any sundry items connected with the day to day running of your business;
Special clothing such as hard hats, high viz vests, logo’d clothing;

Dedicated business premises

  • Heating;
  • Lighting;
  • Cleaning;
  • Water rates;
  • Rent;
  • Business rates;
  • General maintenance;
  • Insurance;

Motor cars & Vans

Running costs of a car or other vehicle – petrol, car tax, insurance, repairs and servicing. If you also use the car privately, you can claim only a proportion – usually the ratio of your business mileage to your total mileage, therefore you will need to keep a log of all your mileage.

Alternatively you could claim the HMRC allowable mileage rates, this may prove better than claiming a proportion of the actual running costs if you do a lot of mileage. Current HMRC rates are 45p for the first 10,000 miles and 25p thereafter.

The journeys must be wholly & exclusively for business to qualify the HMRC mileage rates, if you go to a client and on your return decide to do the weekly shop then the claim will be disallowed.

Travel and accommodation

If you use other transport to travel to clients or go on business meetings etc, you can claim the cost of the journey as a business expense;
Hotel costs and food are allowable, HMRC allow for breakfast and evening meals on an overnight trip but the cost must be reasonable. There is no HMRC definition of what ‘reasonable’ is, however, it would depend on your location and the average cost of meals in that locality;
As with all expenses you must keep receipts for everything you are claiming as an expense;
Should there be any private element to your trip then the whole cost is disallowed;

Receipts and final notes

You must keep receipts for every expense you claim, HMRC may disallow any claim that you cannot substantiate;
You must keep records of what the expense was for when it was incurred and the cost
It is vital you maintain good records for each year you trade, HMRC can ask to see your books and records at anytime and failure to keep them in good order could lead to financial penalties
You must keep your records for 6 years, if you are a CIS contractor the time frame is 3 years, however as HMRC have powers to go back up to 6 years it is strongly advised you keep your records for the statutory minimum time.

Should you have any questions regarding expenses, please do not hesitate to contact Tax Advantage
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