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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'.
On this page:
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.
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.
The list below tells you what kinds of expenses you can generally 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)|
|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.
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:
The type of expenditure it is affects whether - and how - you can get tax relief for it.
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.
You can get tax relief for your business expenditure as long as it's not:
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:
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:
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 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.
A business expense is allowable if it:
The most common expenses that are normally allowable include:
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:
You normally work out the allowable business and non-allowable private proportions based on the mileage covered for each.
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.
You can get capital allowances on the cost of:
For 2013 to 14 onwards, if you decide to use the 'cash basis', you can only get capital allowances on cars.
You can deduct the cost of using your car for business purposes. There are two ways of working out how much you can deduct:
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.
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.
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.
You can get your tax reliefs and allowances by filling in your Self Assessment tax return.
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