Moneymagpie Workforce
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 earnings for the tax yr – and your allowable bills. However what are you able to embrace as a respectable expense -and what is going to HMRC refuse?
Let’s have a look at what you possibly can – and may’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 in the event you flip over lower than £1,000 a yr along with your self-employment. For instance, in the event you occassionally babysit or do some backyard chores, or if in case you have a small enterprise that’s simply getting began.
You don’t should register as self-employed with HMRC in the event you flip over £1,000 or much less in a tax yr. Nonetheless, you possibly can’t declare bills in the event you do it this manner. So, in the event you flip over £1,000 however your bills price £500, you possibly can’t write off that £500 to maximise your earnings. In case you assume 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 pieces on your enterprise 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 completely’ within the line of labor.
For instance, you possibly can’t guide a two-week vacation to attend a one-day convention and declare all the price. You’ll be able to, nevertheless, declare the journey required to get to the convention, and the resort one night time earlier than (and even after, relying on the gap from house 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 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 complete invoice – however you possibly can work out the cheap portion of the price that’s used within the line of enterprise. For instance, you might 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 could are available in at below £1000 a yr. If so, you possibly can declare utilizing ‘simplified bills’ for some issues. This contains the enterprise use of automobiles, price of working from house, and residing in your enterprise premises. All the pieces else must be labored out as precise prices.
Simplified bills saves you an enormous headache! You utilize flat charge bills set by HMRC to make approximated expense claims, fairly than including up each single mile you’ve travelled within the yr (for instance). Try the Gov.uk web site for extra particulars about simplified bills.
The flat charge for working from house, 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 may web you greater than figuring out precise bills (see beneath).
Conventional vs Money Foundation Accounting
Resolve if you wish to observe the normal or money foundation accounting choices. Conventional accounting is the place you rely the invoices despatched out that month – not essentially the cash obtained. This may be helpful whenever you’re organising if in case you have a variety of stock or lengthy cost phrases, as you’ll be capable to offset unpaid invoices.
Money foundation accounting is commonly easier for sole merchants to make use of, although. It solely takes into consideration the cash you’ve truly obtained in that tax yr, and the precise bills incurred.
Whichever foundation you utilize, be sure to preserve ALL RECEIPTS for no less than seven years. Additionally, you will must 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. It will make the quarterly returns required a lot simpler.
Working from Dwelling vs Renting Workplace House
Many freelancers work at home – both for price causes or private desire. Others wish to lease 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 house as an allowable expense in your tax return. You’ll be able to’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’ll be able to embrace residing areas, bedrooms, kitchens, workplace areas, even garages in the event you work in it. You’ll be able to’t use lobbies, porches, hallways (together with mezzanine areas) – however if in case you have a backyard room that’s in your principal energy provide, you possibly can embrace that.
Depend what number of rooms you could have in your house. Divide your month-to-month payments whole by the variety of rooms you’ve received. 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 if in case you have a devoted house workplace, be sure to use it for private use someway. This could possibly be storing private gadgets in it or typically watching a movie in your laptop computer in there. Why?
Capital Positive aspects Tax! In case you promote your property and have used just one room completely for work, you open your self as much as a CGT invoice. That’s why it’s higher to work out proportion time fairly than only one room’s use!
Payments you possibly can expense
Calculate each invoice: lease or mortgage curiosity (not whole mortgage repayments), electrical energy, gasoline, Council Tax, water. Your phone and broadband payments might be labored out on a proportion utilization fairly than room calculations, in the event you don’t have devoted enterprise telephones and broadband.
Workplace Gear 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 received a noticeboard on the wall on your vital paperwork and reminders.
Something that you simply purchase that’s wholly and completely for your enterprise might be claimed. If there’s any private use – equivalent 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 price.
Energy cables, surge protectors, monitor risers: all the pieces and something you utilize to equip your workplace house might be included.
This additionally contains enterprise bills equivalent to postage, envelopes, printer ink, paper, and stationery. It’s also possible to embrace software program purchases – together with month-to-month subscriptions to issues like Dropbox or Workplace 365.
Computer systems and Know-how
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! Nonetheless, you must be certain it counts as an allowable expense fairly than a capital expenditure. An allowable expense is one thing you’ll use for lower than two years – equivalent to lease, payments, and stationery. In case you use money foundation accounting, computer systems are allowable bills, too. Nonetheless, in the event you use conventional accounting, tools is a capital allowance.
As with the opposite issues, in the event you 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 cash” is basically very true with regards to launching and sustaining a self-employed enterprise.
Top-of-the-line investments you can also make in your enterprise is getting the fitting folks to do every activity for you. Whereas many self-employed folks working their very own enterprise are concurrently accountant, marketer, gross sales individual, doer-of-the-actual-thing, social media government – it’s truly higher to rent folks in the event you can.
You’ll be able to offset the price of skilled charges, equivalent to accountants and solicitors, as an allowable expense. Utilizing knowledgeable will prevent a LOT of time and make it easier to keep away from probably huge (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 below allowable bills, too. That is completely different to having an worker: you should use contractors right here, fairly than rent somebody on payroll. If you need an worker, you’ll must 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, fairly than a enterprise account, which regularly means no banking expenses.
Nonetheless, if you’d like entry to enterprise bank cards, loans, and even to work with public organisations, you’ll want a enterprise account. These come at a value – however you possibly can offset month-to-month charges as an allowable expense. It’s also possible to declare overdraft expenses, bank card curiosity funds, leasing prices, and forex conversion charges.
These utilizing conventional accounting may also declare for dangerous 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 (equivalent to your buyer has gone bankrupt) you possibly can write this off towards your earnings.
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 folks go to your premises, you’ll additionally want public legal responsibility insurance coverage by regulation. These prices all rely for allowable bills.
In case you’re a member of knowledgeable organisation or union, you possibly can usually embrace skilled indemnity insurance coverage in your membership, so it’s value checking the tremendous print earlier than you are taking out a separate coverage.
Advertising Prices
You’ll be able to’t run a enterprise in the event you don’t shout about it! All the pieces you do to market your enterprise can rely 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! In case you 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 pieces else it is advisable give away as tempting freebies – all of them rely as a respectable advertising expense. The identical goes for print promoting in your native paper or nationwide magazines and newspapers, paying to checklist your enterprise in a listing, and your junk mail prices.
Alas, taking potential purchasers out for dinner doesn’t rely as advertising. ‘Consumer 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 type. It’s also possible to cost subsistence for drinks and meals to an inexpensive quantity if you’re working away out of your regular place of business, equivalent to if you must go to a unique metropolis for a convention.
Clothes and Uniforms
Do you wish to get t-shirts along with your emblem on? What about branded hoodies from VistaPrint? Maybe you wish to put on a wise uniform that’s solely used on your line of labor, equivalent to in the event you run your individual cleansing enterprise. Or, in the event you want particular clothes equivalent to steel-capped security boots, these might be claimed.
You’ll be able to declare branded clothes as a advertising expense. It’s also possible to declare uniform prices – and you may declare laundry prices for uniforms, too.
You’ll be able to’t, nevertheless, declare for garments that you simply’d put on usually at house. Or perhaps a enterprise swimsuit for conferences in the event you’re normally in denims and a hoodie! The rule with clothes may be very a lot that it both has to rely as advertising (i.e., branded) OR used as a uniform ‘wholly and completely’ for your enterprise.
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 trade organisations in the event that they’re associated to your enterprise.
Additional training additionally counts as an allowable expense if it builds on a ability you have already got for your enterprise. For instance, in the event you’re a contract occasions producer, your job is usually advertising. So, you might declare for a advertising diploma or perhaps a full CIMA qualification. Nonetheless, you couldn’t determine you wished to alter careers as a bricklayer and rely that course as an allowable expense.
This nonetheless leaves your alternative base fairly broad, particularly in the event you’re a sole dealer. For instance, let’s say you’re a contract author – plenty of writers profit from studying how you can use graphic design software program. So, an internet Photoshop course may rely. Or, any business-related course equivalent to a bookkeeping qualification can even qualify for any sole dealer, as they want these expertise to construct and keep 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 Autos
In case you commute often to an workplace, you possibly can’t declare these prices as an expense. All the pieces else although is a good huge tick within the Sure You Can Declare column!
Prepare, bus, even air fares all rely in the event you’re travelling wholly and completely for enterprise functions. In case you purchase a automobile solely for your enterprise, you possibly can rely the acquisition as a capital expense (or the lease charges as an allowable expense). All MOT, insurance coverage, servicing, repairs, parking, and gas 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 about pretty excessive so ought to cowl gas 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. That you must ask your self if it’s used ‘wholly and completely’ for enterprise use. Listed here are some examples chances are you’ll come throughout – all of it relies on your line of labor and whether or not you utilize one thing just for your enterprise 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 might declare for different issues – together with shopping for books and newspapers, and even subscriptions like Netflix and Spotify?!
That you must show an actual enterprise use. Taking part in Netflix whilst you’re working for ‘workplace leisure’ doesn’t rely! Nonetheless, if you’re – for instance – an actor or budding movie director, you might justify the subscription as a analysis device. The identical goes for Spotify in the event you’re a musician or podcaster, and even issues like Twitch in the event you’re a gamer attempting to make an earnings from streaming.
Health club prices
Now, 99.99% of the time this received’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, health club tools 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 might attempt claiming prices for hair and sweetness remedies. You’ll want to have the ability to show, if questioned, that the expense was a respectable enterprise declare although!
Inns
Travelling wherever for enterprise conferences or occasions usually means going a great distance from house. 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 on your assembly.
In a single day meals
Like motels, in the event you’re travelling away out of your main place of business 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 price should appear cheap.
Pensions
We will’t stress this sufficient: contribute to your pension! Self-employed folks 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 vital you embrace your whole annual contributions right here, because it means you’ll profit from the tax reduction on supply – that 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 say for safety prices to your enterprise premises – in case your canine is taken into account a guard canine, technically you possibly can declare for his or her buy, repairs, vet payments and meals! Nonetheless, at all times do not forget that HMRC may audit you at any time – so in the event you’re pondering of itemizing your chihuahua as a guard canine, perhaps assume twice…
