If you're self-employed, you pay tax on your profit — your income minus allowable business expenses. Claiming everything you're entitled to can save a lot of tax.
The basic rule: a cost is allowable if it's wholly and exclusively for your business. If something is used privately as well, you can usually only claim the business part.
Costs you can usually claim
- Office, property and equipment: rent for business premises, business rates, repairs, and equipment such as computers and tools (claimed as capital allowances)
- Working from home: a share of heating, electricity and broadband, or a simplified flat rate based on hours worked at home
- Travel: fuel, parking, train and bus fares for business journeys — not your normal commute. You can use HMRC's mileage rates instead of actual vehicle costs
- Stock and materials: goods you buy to sell or use in your work
- Staff costs: wages, employer's National Insurance and pension contributions for employees, and subcontractor costs
- Phone and internet: the business share of your bills
- Insurance: business insurance such as public liability
- Professional fees: accountants, solicitors and professional subscriptions
- Marketing: advertising, your website and business cards
- Bank charges: business bank account fees and interest on business loans
- Clothing: uniforms, protective clothing and costumes — not everyday clothes
- Training: courses that improve skills you already use in your business
Costs you can't claim
- Your own wages or drawings
- Everyday clothing, even if you wear it for work
- Client entertainment
- Fines and penalties
- Your normal journey to a regular workplace
The £1,000 trading allowance
If your total self-employed income is £1,000 or less in a tax year, it can be tax-free. If your income is higher, you can choose to deduct £1,000 instead of your actual expenses — useful only if your costs are less than £1,000.
Keep your records
Keep receipts and bank records for every expense — see our business records guide.
Use our self-employed tax calculator to see what you'll owe.