If you are self-employed, understanding which business expenses you can claim can help reduce your tax bill. By claiming allowable expenses, you only pay Income Tax on your business profit rather than your total income.
At Cobble, we help sole traders and business partners claim everything they are entitled to while staying compliant with HMRC rules.
What Are Allowable Business Expenses?
Allowable expenses are the everyday costs of running your business that can be deducted from your income before calculating your taxable profit.
For example, if your business earns £40,000 and you have £10,000 of allowable expenses, you will only pay Income Tax on £30,000.
Personal withdrawals from your business are not allowable expenses.
Who Can Claim Self-Employed Business Expenses?
This guidance applies to sole traders and business partnerships.
If you operate through a limited company, different rules apply. Companies claim business costs when calculating profits for Corporation Tax.
What Business Expenses Can You Claim?
Many day-to-day business costs qualify as allowable expenses, including office supplies, phone and internet bills, business travel, uniforms, staff costs, stock, raw materials, business insurance, bank charges, heating and lighting for business premises, advertising, website costs and training that maintains or updates existing business skills.
Some larger purchases, such as equipment, machinery and business vehicles, may need to be claimed through capital allowances rather than as standard business expenses.
Expenses With Both Business and Personal Use
If an expense is used for both business and personal purposes, you can only claim the business element.
For example, if your annual phone bill is £200 and £70 relates to business use, only £70 can be claimed.
Keeping accurate records will help support your claims if requested by HMRC.
Claiming Expenses When Working From Home
If you run your business from home, you may be able to claim a proportion of household costs such as heating, electricity, council tax, mortgage interest or rent, internet and telephone bills.
Your claim should reflect how much of your home and time is used for business. Alternatively, HMRC‘s simplified expenses provide flat rate allowances for working from home and certain other business costs.
The £1,000 Trading Allowance
If you choose to use the £1,000 trading allowance, you cannot also claim allowable expenses or capital allowances.
Choosing the most tax efficient option depends on your circumstances, so professional advice can help.
Need Help Claiming Your Business Expenses?
Claiming the correct business expenses can make a significant difference to your tax bill. At Cobble, we help self-employed individuals maximise legitimate tax relief while remaining fully compliant with HMRC requirements.
If you need advice on claiming business expenses or completing your Self-Assessment tax return, get in touch with our team today. We’re here to help you keep more of what you earn.