Tax relief Tax deductions
Tax deductions are allowable for certain expenses you incur in your business if you are self-employed.
Employees can claim a number of deductible expenses too, although there are fewer of these and they apply only if you have not been reimbursed by your employer.
Self-employed deductible expenses
Expenses that you are allowed to claim against tax if you are self-employed include outgoings associated with carrying on your business.
You are not permitted to claim for non-business or personal expenditure, so it's important to keep careful records.
You are also allowed to claim for certain capital items related to your business. You need to declare these separately.
- accountancy, legal and other professional fees, including professional indemnity insurance;
- advertising, in newspapers, mailshots and websites;
- bank, credit card and financial expenses including overdraft and credit card charges, hire purchase and leasing payments;
- communications and office costs, including phone, mobile, internet, postage, stationery, printing and computer software;
- car and van expenses including insurance, repairs, servicing, fuel, parking, and AA/RAC membership;
- cost of goods you are going to sell, such as the cost of raw materials and the direct cost of producing goods;
- energy, including light, heat and power (business proportion only if using home as office);
- insurance, as long as it is a business specific policy;
- interest on bank loans and other business loans;
- property costs including insurance and security for business premises;
- rent for business premises;
- travel expenses such as train, bus, air and taxi fares, hotel costs and meals on overnight business trips;
- wages and staff costs such as salaries, pensions, staff benefits, and employers' NICs.
Go further: Check your tax position in our guide to tax for the self-employed.
Self-employed deductible capital allowances
Capital allowances are permitted on items you use in your business that have a useful life of more than two years. Deductions in this category include:
- plant and machinery, including cars, vans, computers and tools;
- fixtures and fittings, including shelves and furniture.
If you are registered for VAT, you can only claim capital allowances on the net cost of the asset, excluding VAT.
If you are not registered for VAT, you can claim capital allowances on the total cost, including VAT.
Go further: Make sure you understand self-employed capital allowances
Employee tax deductions
Employees who have not been reimbursed by their employer can claim a tax deduction for certain business expenditure. Examples include:
- business travel and subsistence, including business mileage if you use your own vehicle on business, or fuel you buy when using a company car;
- tools and specialist clothing, if you have to provide these for your work;
- household expenses when working at home, such as extra heating and lighting. Capital allowances may also be available for some work-related expenditure;
- professional fees or subscriptions if these are related to your work and you pay them personally.
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