Tax for the self-employed Self-employed: tax allowable expenses

Many business purchases can be offset against income tax.

If you're self-employed, you can claim expenses against your tax bill - but not all business expenses qualify, so it's important to make sure your claim is valid.

In general, if you buy something for your business, you can deduct its full cost when working out your taxable profits and you get immediate tax relief for the full amount; with a capital asset- such as a computer or machinery - you can claim for this under different rules. 

Self-employed: expenses you can claim

  • Running costs of a car or other vehicle, including petrol, car tax, insurance, repairs and servicing - this is based on the proportion of mileage that was solely for your business
  • Running costs of dedicated business premises - or your home office costs
  • Salaries and benefits of any employees

 Self-employed: expenses you can't claim 

Travel and accommodation

  • Travel between home and workplace
  • The cost of buying a vehicle (but may qualify for capital allowances) 
  • Meals, except reasonable amount for breakfast and evening meals on overnight trips.

Premises

You cannot claim the initial cost of buildings, alterations and improvements (such as extensions to house your business) – although such work may qualify for annual investment allowance or capital allowances. 

More on allowances: Self-employed capital allowances - get to grips with how investing in your business can reduce your tax bill.

Salaries and benefits 

If you are self-employed you cannot claim your own wages, salary or other money drawn from the business. 

You are also excluded from claiming your own National Insurance contributions and income tax. your own pension costs, life insurance.

Call the Which? Money Helpline

The rules are not straightforward on expenses and allowances. Which? members can log in to see our video guide, where an expert from the Which? Money Helpline covers common tax questions she's asked by people who are self-employed. All Which? members can call the Money Helpline. To get access to this and the other benefits of Which?, sign up to a £1 trial.

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