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

Many business purchases can be offset against income tax.

If you are 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, unless something you buy for your business is a capital asset- such as a computer or machinery (which you claim for under different rules), you can deduct its full cost when working out your taxable profits. You get immediate tax relief for the full amount. 

Here are some key expenses you can claim.

Self-employed: expenses you can claim

Travel and accommodation

Running costs of a car or other vehicle, including petrol, car tax, insurance, repairs and servicing. 

  • If you also use the car privately, you can claim only a proportion
  • This is usually the ratio of your business mileage to your total mileage
  • It's worth keeping a log of business mileage for a representative period as well as all bills.

Travel and accommodation on business trips and between different places of work can be claimed as well.

Go further: Car running costs - read our expert advice on the costs of running your motor

Dedicated business premises

The following can be claimed if you work from dedicated business premises: 

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

Go further: Save with Which? Switch - use our service to switch your energy supplier and save hundreds on your bills

Working from home

If you work from home you can claim a proportion of costs, such as lighting, heating, cleaning, insurance, mortgage interest, council tax, water rates and general maintenance.

The proportion should be based on, say, the floor area or number of rooms used for business, and the proportion of the time it is used for business if it is not for exclusive use.

Salaries and benefits

These can be claimed for as follows: 

  • Employees' wages and redundancy payments
  • Employers' National Insurance
  • Insurance and pension benefits for employees 
  • Any employee childcare provision you make 
  • The cost of training employees

Go further: National insurance explained - read our guide to paying National Insurance and the rates that apply to you

Self-employment: 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. 

Go further: 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.

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