Tax allowances and reliefs if you're self-employed

If you're self-employed there are various reliefs, allowances and expenses you can claim to reduce your tax bill.

You can take away from your business income various running costs and expenses associated with your business to work out your profits - but you can't take away any private expenses. And you can claim special reliefs for certain 'capital items' - one-off costs to buy or improve an asset you keep and use for your business.

You can usually claim expenses, reliefs and allowances for the current tax year and for the previous four years - but there are some where you have a shorter time limit for claiming. This guide tells you about the tax allowances and reliefs you can get as a self-employed business person - including the expenses you can claim - and when and how to claim.

This guide tells you about the tax allowances, deductions and reliefs you can get as a self-employed business person.

If you're looking for a very quick introduction to expenses only, for example because you're just starting out and want to know the kind of things you can claim for, follow the link 'Expenses at a glance'.

For details on tax allowances, reliefs and expenses, start with the section 'Types of expenditure and associated tax relief'.

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Expenses at a glance

If you're self-employed you usually have various running costs and expenses associated with your business. You can take these costs and expenses away from your business income to work out your profit, and produce accounts. You may also be able to get 'capital allowances' for certain other costs, like machinery, which will also reduce your taxable profits.

What are 'allowable expenses'?

Allowable expenses are the costs (you may call them expenses or outgoings) that you pay out in the course of earning business profits and which you can claim for. You can't claim for non-business or personal items. Buying or improving capital items, such as machinery, which last for several years, is not a business expense for tax purposes but you may still be able to claim for them as long as they are related to your business. Capital items need to be shown separately on your Self Assessment tax return.

What kind of things can you claim for?

The list below tells you what kinds of expenses you can generally claim for.

Common expenses you can claim for

Accountancy and professional fees Cost of goods that you purchase to sell or provide a service Rent, rates, power and water (business proportion only)
Advertising Insurance Logo'd uniform
Business bank, PayPal and credit card charges Interest on business loans Wages and salaries paid to staff plus other staff costs
Car, van and travel expenses Irrecoverable debts Postage
Stationery, phone and internet costs Professional journals Safety wear such as safety helmet

Each business is different. You'll find a more extensive list for the tax years 2012 to 13 and earlier by following the link below.

Expenses and allowances for the self-employed - what you need to know (PDF 108K)

Types of expenditure and associated tax relief

While you're running your business you're likely to spend money on different sorts of things. Your expenditure - or costs - will usually fall into three different types:

  • capital
  • business
  • private

The type of expenditure it is affects whether - and how - you can get tax relief for it.

Capital expenditure

Expenditure on buying, creating or improving a business asset that you keep to earn the profits of your business is capital expenditure. So, the cost of buying a van for your business is capital expenditure but the cost of hiring it isn't.

Other examples of capital expenditure include the cost of buying business premises, machinery, computers, fixtures and furniture.

You won't be able to get tax relief for all types of capital expenditure. And if you can, there are special rules for how you can claim it.

Business expenditure

You can get tax relief for your business expenditure as long as it's not:

  • capital expenditure
  • specifically non-allowable - for example entertaining expenditure

But to be allowable expenditure, it must be 'wholly and exclusively' for carrying on and earning the profits of your business. This means that your sole purpose for the expenditure must be a business purpose.

For 2012 to 13 and earlier, you can get some private benefit from the expenditure and still get tax relief for the amount spent for your business, as long as either:

  • the private benefit was incidental and not the reason for the expenditure
  • you can clearly identify and separate the expenditure between business and private purposes

For 2013 to 14 onwards, there are some new simple flat rates you can use that may reduce the records you need to keep. You can claim flat rate expenses for:

  • business costs for vehicles
  • business use of your home
  • private use of business premises as a home

Find out about simplified expenses for your 2013 to 14 tax return (opens new window)

You can deduct the full amount of your allowable business expenditure from your business income to work out your taxable profits.

This guide provides further information on the difference between 'allowable and non-allowable expenses' below.

Private expenditure

Private expenditure is what you spend on your day-to-day living expenses and your normal household expenses. It includes the amounts you take from your business as a wage - your 'drawings'.

It also includes the private part of any expenditure that's for both business and private purposes.

Private expenditure is non-allowable expenditure - you can't get tax relief for it.

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Allowable and non-allowable business expenses

A business expense is allowable if it:

  • isn't capital expenditure
  • isn't specifically non-allowable
  • is wholly and exclusively for business purposes

The most common expenses that are normally allowable include:

  • cost of stock
  • payroll costs
  • premises costs
  • repairs
  • motor and travel expenses
  • finance costs
  • administration costs
  • professional fees

Expenses incurred for both business and private purposes

Expenditure for a mixed private and business purpose is non-allowable expenditure. An example would be the cost of travelling to town to bank the business takings and do your private shopping at the same time.

If you can separate the expenditure between business and private purposes, the business part is allowable. So, if you use a car separately for business and private purposes, the proportion of the expenses that relates to:

  • business use is allowable
  • private use is non-allowable

You normally work out the allowable business and non-allowable private proportions based on the mileage covered for each.

Find out more about business expenses for your 2012 to 13 tax return (PDF 128K)

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Key expenses, allowances and reliefs if you're self-employed

The expenses, allowances and reliefs that you can get vary from business to business. It isn't possible to provide a complete list here, but some of the key ones are listed below - with links to more information.

Capital allowances

You can get capital allowances on the cost of:

  • plant and machinery - including cars, vans, computers, equipment, tools
  • fixtures and fittings - including shelves, furniture, electrical and plumbing fittings
  • some buildings - including industrial and agricultural buildings

For 2013 to 14 onwards, if you decide to use the 'cash basis', you can only get capital allowances on cars.

Find out more about capital allowances

Find out more about the cash basis for your 2013 to 14 tax return (opens new window)

Find out about simplified expenses for your 2013 to 14 tax return (opens new window)

Motoring expenses

You can deduct the cost of using your car for business purposes. There are two ways of working out how much you can deduct:

  • a fixed rate for each mile travelled on business, using fixed mileage rates
  • the actual expenses, worked out using detailed records of business and private mileage to apportion your recorded expenditure

More about business motoring expenses for your 2012 to 13 tax return (PDF 128K)

Find out about new HMRC flat rates for your 2013 to 14 tax return (opens in new window)

Expenses related to premises

You can deduct the costs of maintaining your business premises - including rent, rates, heat, light, repairs and insurance. You can also deduct the business part of these costs if you run your business from home.

Go to information about deductions for premises for your 2012 to 13 tax return (PDF 105K)

Find out about new flat rates for private use of business premises for your 2013 to 14 tax return (opens in new window)

Administrative costs including professional fees and subscriptions

You can deduct the administrative costs of running your business, including advertising stationery, postage, telephone and fax. You may also be able to deduct the cost of trade or professional journals or subscriptions.

Go to information about deducting administrative costs for your 2012 to 13 tax return (PDF 105K)

Get a list of subscriptions to approved professional bodies

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Special rules and situations

There are a number of situations when you might be able to get a particular tax relief or allowance, for example if you're a farmer or an artist or your business has made a loss.

Self-employed tax reliefs and allowances - special rules and situations

Childminders expenses

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How to get tax relief

You can get your tax reliefs and allowances by filling in your Self Assessment tax return.

Completing your tax return

Time limits for getting tax relief

The time limits for asking for tax relief are shown in the table below.

Tax year Tax year ended on You must claim by:

2010 to 11

5 April 2011

5 April 2015

2011 to 12

5 April 2012

5 April 2016

2012 to 13

5 April 2013

5 April 2017

2013 to 14

5 April 2014

5 April 2018

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More useful links

Closing or selling a business

Self-employment records for your Self Assessment tax return

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