Claiming back on expenses that are wholly and exclusively made for the running of your business is a great way to reduce your tax bill at the end of each year.
Typical allowable expenses include:
- Office costs (stationary, printer ink/cartridges, postage, phone/mobile/internet bills).
- Clothing expenses (should you require specific protective wear, a uniform or costume).
- Financial costs (hiring an accountant).
- Training courses (as long as they are related to your current line of work and will help improve your skills and knowledge).
- If you work from home, you may be able to claim a proportion of costs for your heating, electricity, Council tax, mortgage interest/rent and internet/telephone use.
However, the expenses you are entitled to will all depend on your type of self-employment.
For example, a limited company contractor will have additional running costs that won’t apply to those working as a sole trader, and an umbrella company contractor is generally unable to claim for expenses due to the fact that they are considered an employee.
One of the few expenses that mostly apply to all self-employed workers is subsistence while travelling for work reasons.
It’s worth pointing out that these expenses are not allowable if you’re travelling to your normal place of work.
Typical subsistence expenses include:
- Train, bus, air and taxi fares
- Vehicle insurance
- Hire charges
- Breakdown cover
- Hotel rooms
- Meals on overnight business trips
There is the option of using simplified expenses for your car, van or motorcycle for mileage instead of calculating the actual costs of buying and running your vehicle.
A flat rate is applied in the following way:
- Cars and goods vehicles for the first 10,000 miles – 45p per mile
- Cars and goods vehicles after 10,000 miles – 25p per mile
- Motorcycles – 24p per mile
How do you claim for an expense?
All expenses will need to be added to your self-assessment tax return.
It’s essential that you keep records and receipts of all business costs for at least three years from the end of the tax year they relate to, this way you have proof should HMRC have any queries about the expenses you’ve claimed for.
We hope this page has answered some of your questions on subsistence expenses. Our team of experts are available to answer any queries you may have, so drop us a line on 01442 795 100 or email email@example.com.