Common Allowable Expenses For Your Self Assessment Tax Return

Posted: 19th Nov 2024 by Hunter Gee Holroyd Taxation

Filing a Self Assessment tax return can be a daunting task, but it’s an important part of managing your finances as a sole trader, freelancer, or business owner. One way to reduce the amount of tax you owe is by ensuring that you claim all the allowable business expenses.

Here’s a breakdown of the common expenses you can include in your Self Assessment tax return.

1. Business Premises Costs

Rent – if you rent any property (like an office, storage, or warehouse) this is fully deductible.
Utility Bills – Electricity, gas, water, and heating bills for your business premises are claimable.
Property Maintenance and Repairs – Costs for fixing any issues, like repairs to plumbing or the building’s structure.
Insurance – If you have business insurance, such as for the building or public liability insurance, these premiums are deductible.
Security – any security costs such as paying a third party to look after the property.

2. Supplies and Equipment

Stationery – Pens, paper, printing costs, ink cartridges, and other office supplies are tax-deductible.
Equipment/Tools – Items like computers, printers, and office furniture are claimable. Also hammers, saws etc. For items over £1,000, you may need to claim them through capital allowances.
Software and Subscriptions – Costs for any business software (e.g., accounting or project management tools) and online subscriptions (like cloud storage or industry-specific resources) are deductible.
Postage – any money you spend on stamps or couriers are deductible.
Telephone or Mobile – if you’re personal and business phone are the same, it will be a percentage of the costs
Broadband and Internet

3. Travel and Vehicle Expenses

If your business involves travel, you can claim the costs associated with it:

Vehicle Costs – this includes, insurance, hire costs, licencing, and potentially vehicle purchase, depending on the vehicle and the accounting method you use.
Parking
Fuel – You can claim back the cost of fuel for business trips. Keep records of mileage, dates, and purpose of each trip.
Car Maintenance – If you use your personal car for business purposes, you can claim for maintenance, repairs, servicing, and breakdown cover.
Public Transport – Train, bus, or taxi fares for business-related travel are also deductible.
Hotels and Accommodation – if you are travelling for businesses you can claim back accommodation costs.
Meals for Overnight Trips – are deductible for business trips

HMRC offer an alternative for vehicle expenditure which cover fuel, wear and tear, and insurance costs. TheHMRC’s approved mileage rates for 2024/2025 is 45p per mile for the first 10,000 miles and 25p per mile thereafter. It depends on your situation whether this is worth it or not.

4. Staff and Employee Costs

If you employ others, you can deduct a range of costs:

Salaries and Wages – You can claim the cost of paying employees, including any bonuses.
National Insurance – Employer National Insurance contributions are deductible.
Pension Contributions – Contributions to employees’ pensions are eligible for a tax deduction.
Training Costs – If you pay for any training that helps your employees improve their skills for the business, you can claim the cost.

5. Marketing and Advertising

Any marketing costs that promote your business are deductible, including:

Advertising – Whether it’s online ads, flyers, posters, or print media, these costs are tax-deductible.
Website Costs – The cost of creating and maintaining a website, including domain registration, hosting fees, and development costs.
Social Media Promotion – Any fees you pay for social media ads or influencer partnerships can be claimed.
Professional Subscriptions – any subscriptions you use to run your business e.g. Canva or Mailchimp are deductible.

6. Financial Fees

Bank Charges – Monthly fees or transaction fees for a business account.
Loan Interest – Interest on business loans or overdrafts used to fund your operations.
Professional Fees– fees for professionals such as accountants, business consultants, legal fees, and surveyors are deductible.
Alternative Finance
Hire purchase interest
Lease payments
Irrecoverable debt

7. Working From Home Costs

For self-employed individuals who work from home, for all or part of the week, you can claim a proportion of your household expenses. This includes:

A Portion of Rent or Mortgage Interest – You can claim a percentage of your rent or mortgage interest based on the number of rooms in your home used for business purposes.
Utility Bills – Similarly, you can claim a portion of your utility bills (electricity, gas, etc.).
Internet and Phone – If you use your home phone and internet for business purposes, you can claim part of these costs. Make sure you keep a record of business-related usage.

8. Depreciation and Capital Allowances

For expensive assets that have a long lifespan (e.g., machinery, equipment, or vehicles), you can claim depreciation as a business expense:

Capital Allowances – If you buy assets over £1,000, you may need to claim capital allowances, allowing you to deduct the cost over several years.
Annual Investment Allowance (AIA) – If you purchase qualifying assets, you can claim 100% of the cost in the year of purchase under the AIA, up to a limit.

Some Disallowable Expenses Are:

Parking and speeding fines
Travel to a permanent workplace
Work clothing (that is non-protective)
Client entertaining
Improvements to office buildings – e.g. an extension

For every expense you claim, you must keep detailed records, including receipts, invoices, and statements. Proper documentation ensures that your claims are legitimate in case the HMRC need to see proof.

Just remember this is not a full list of everything you can claim. The main question to ask yourself is:

‘Is it wholly and exclusively necessary for the purposes of my trade?’