Self-Employed Tax Deductible Expenses

As the 2020 Budget is due on 11 March, there will be a number of changes to income tax, as well as how it’s all worked out, as well as the increase in the personal allowance. For freelancers and self-employed homeworkers, do you know what you can claim for as expenses on your Self Assessment form?

It’s important to know that you can’t just subtract all your self-employed expenses. HMRC has clear rules about what can and cannot be included, which is why the costs that you can include in your calculation are called ‘allowable expenses’.

By defining allowable expenses, HMRC is trying to make sure that you only deduct expenses that are strictly related to your business. Understanding which of your self-employed expenses are allowable and calculating your profit accurately is important for making sure you pay the right amount of tax.

When you’re completing your tax return, these are some of the costs that usually count as allowable business expenses.

Office expenses

Business stationery, printing and printer ink costs and postage can be included. Equipment such as computers, printers and software can be included but may have to be claimed as capital allowances.

Business premises

You can claim expenses for rent, maintenance and repair, utility bills, property insurance, and security. You can’t claim expenses for buying or building your business premises.

If you run your business from home, you can include part of your home utility bills, but you need to work out the proportion of your home that’s used for business, and what proportion of the month it’s being used for business purposes. If you work from home at least 25 hours a month, you can use ‘simplified expenses’, which is a flat monthly rate calculated by HMRC.

Marketing

The cost of marketing including newspaper advertising, directory listings, free samples and website costs can be claimed.

Subscriptions

You can include the cost of a membership to trade bodies or professional membership organisations if they’re relevant to your business, and the cost of subscriptions to trade or professional journals.

Always keep a record of your working out for your expenses, as well as recipes and proofs of purchase.

If you need a tax accountant in Marlow, get in touch today.