Allowable Expenses for the Self‑Employed

Allowable Expenses for the Self‑Employed: What You Can Claim

If you are self‑employed, making sure you claim all of your allowable business expenses is one of the simplest and most effective ways to reduce your tax bill. Yet, many individuals still miss out on legitimate claims, often paying more tax than they need to.

At its core, the principle is straightforward: you only pay tax on your business profit, not your turnover. For example, if your business turns over £40,000 and you incur £10,000 in allowable expenses, your taxable profit is reduced to £30,000. That difference can have a significant impact on your overall tax liability.

However, it’s important to draw a clear line - personal spending and money withdrawn for private use cannot be claimed as business expenses.

What Counts as an Allowable Expense?

HMRC defines allowable expenses as costs that are incurred “wholly and exclusively” for the purposes of running your business. In practice, that covers a wide range of everyday business costs.

Common examples include:

Office and admin costs

• Stationery and printing
• Phone and broadband bills (business use portion)
• Software subscriptions and cloud services

Business premises costs

• Rent, utilities and business rates
• Insurance (such as public liability or professional indemnity)
• Repairs and maintenance

Travel expenses

• Fuel and mileage for business journeys
• Parking charges and tolls
• Public transport costs
• Accommodation (where travel is required for work)

People and resourcing costs

• Staff wages and salaries
• Subcontractor fees
• Employer’s National Insurance contributions

Other key expenses

• Uniforms and protective clothing (not everyday wear)
• Advertising and marketing, including social media campaigns
• Website design, hosting and maintenance
• Professional subscriptions and memberships
• Training that updates or maintains existing skills
• Cost of goods, stock or raw materials (for resale businesses)

Working From Home: What Can You Claim?

If you run your business from home, you may be able to reclaim a proportion of your household costs. This can include:

• Heating and electricity
• Internet and telephone usage
• Rent or mortgage interest (not capital repayments)

There are two ways to claim:

Actual costs method - calculating the proportion of household expenses used for business

Simplified expenses - using HMRC’s flat-rate allowances based on hours worked at home

Many self-employed individuals opt for simplified expenses as a practical, time-saving alternative—particularly if record-keeping is limited.

Don’t Miss Out on Tax Savings

While the rules around allowable expenses are relatively clear, knowing what to claim—and how to justify it— can make a substantial difference to your tax position.

Mistakes tend to fall into two categories:

• Under-claiming, which leads to higher tax bills
• Over-claiming, which risks HMRC enquiries and penalties

Striking the right balance is essential.

How Charlton Baker Can Help

At Charlton Baker, we work closely with self-employed individuals and business owners to ensure they claim all legitimate expenses while remaining fully compliant with HMRC requirements.

Whether you’re newly self-employed or looking to optimise your current tax position, our accountancy and tax advisory services can help you:

• Identify overlooked expenses
• Put efficient record-keeping systems in place
• Plan ahead to reduce future tax liabilities

Give us a call on 01380 723692 or email us here.