5 myths about self-assessment expenses busted

Confused about which expenses you can claim on a self-assessment tax return? You're not alone, according to Which? research.

In November 2023, we surveyed 508 people who will be filing a self-assessment tax return for the 2022-23 tax year and discovered over half incorrectly think you could claim expenses on your commute and six in 10 falsely believe you must show proof of every expense you claim when filing — although you should keep records to show HMRC if asked. 

Not knowing the rules could mean that you end up paying more tax than you should. To help avoid that happening to you, Which? explains how claiming expenses can lower your tax bill and busts some of the most common myths about what you can and cannot claim.

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How can claiming expenses reduce your tax bill?

Claiming tax relief on work-related expenses means that the tax you'd usually be charged on an item is removed. For instance, if you're a basic-rate taxpayer and buy something for work for £100, you can claim £20 relief – because it's 20% of the total you paid. Self-employed workers can do this when they file a self-assessment tax return.

If you're self-employed, you can choose to use the ‘trading allowance’. This deducts £1,000 from your gross income. However, if you go for this option, you won't be able to claim for any actual expenses you've incurred.

Knowing what you're allowed to claim can be complicated - especially as self-employed work can vary significantly from person to person. So it's easy to see why many people get in a tangle when deciding what expenses to include on their self-assessment form. 

• Find out more: tax-deductible expenses explained

5 myths about expenses busted

Below, we bust some of the most common myths about claiming business expenses:

1. Work-from-home expenses are no longer accepted

Millions of workers were able to claim tax relief on expenses they incurred from working from home during the Covid-19 pandemic. But the rules have changed since then, with self-employed workers - whose homes doubled up as workplaces long before Covid - left wondering whether they're still eligible.

In our survey, 14% answered incorrectly and 18% didn't know if they could claim working-from-home expenses.

While it's true that employed workers can now only claim for home working if they don't have any other choice of workplace - for example, they live far away from their office as a requirement of the job - self-employed taxpayers can still benefit from relief on many household expenses. That includes lighting, heating, water rates and even council tax.

That doesn't mean you can claim for the cost of running your entire home, however. The figures you submit should be based on the floor area or the number of rooms used for business, and the proportion of time the space is used for working. Our guide on self-employed expenses provides more information on how it works in practice.

If you work for 25 hours or more a month from home, another option is to use HMRC's simplified expenses system.

2. I can claim for my commute

If you don't work from home and need to travel to the office or other workplace, then the cost of driving or taking public transport can rack up. But sadly, HMRC doesn't count money spent on journeying from home to work as a legitimate business expense.

In our survey, 51% incorrectly thought they could claim expenses on their commute

Nevertheless, you can claim back travel for business trips - for example, going to a conference or external meeting. If you use a car for business, you may also be able to claim back the running costs. That includes petrol, car tax, insurance, repairs and servicing.  

3. My work-from-home sweatpants are a legitimate expense

Clothing that is or could be part of your 'everyday wardrobe' is not allowable for tax relief - whether you wear a shirt and tie or prefer to work in your pyjamas in bed. And while wearing a suit to meet an important client is likely to impress, HMRC also won't give tax relief on the cost of buying a smart two-piece from your favourite tailor.

You can, however, claim tax back on clothing that is needed in order to carry out your job. For example, you can claim for specialist uniforms or protective clothing such as a high-vis vest or helmet.

Bear in mind, if your job doesn’t actually require you to wear a uniform or specific clothing, and you just choose to do so – you unfortunately won’t be able to claim on your tax return.

4. I can claim for my morning coffee

You can claim back money on food and drink if you can prove that it's done as a business expense. 

The general rule is that you’re allowed to claim a meal as subsistence, but it has to be outside of your everyday working routine. 

For example, that Starbucks flat white you treat yourself to on your break doesn't count, but you can claim back money on a meal you have in a restaurant with clients or suppliers.

You also cannot claim the same amount back if the food you have indulged in is expensive or extravagant. So a slap-up meal at a posh restaurant or champagne at The Ritz is definitely out of the question.

5. You can't claim expenses or unused allowances for previous tax years

Our survey found that 40% of respondents falsely believe you can’t change a tax return form after it has been submitted. In fact, you can make amendments up to four years after the end of the tax year in question.

Once you’ve filed your 2022-23 return, you can amend it online anytime from 72 hours after you’ve filed it until 31 January 2025. But if there are any expenses or allowances you forgot to take advantage of in the last financial year, then you have until the end of this month to tweak your 2021-22 tax return online. 

If you want to update a return from 2020-21 or earlier, you'll need to write to HMRC explaining which tax year you are correcting and why you want to make an amendment. 

• Find out more: Important tax return deadlines in 2024

Try the Which? tax calculator

You can also use the Which? tax calculator to get to grips with your tax liabilities and allowances. 

It provides clear, no-nonsense explanations about the different types of taxable income, plus suggestions for allowances you might have missed. You can even use the tool to file your return directly to HMRC.