If you're self-employed you'll pay tax on the profits you earn each year (which might be different to what you actually pay yourself).
For example, if your sales are £50,000 and you claim expenses of £10,000 you’ll be taxed on profit of £40,000.
To make sure you only pay the right amount of tax, and not more than you need to, you should keep good records of the expenses you need to claim.
What expenses can I claim?
You can claim any expenses that relate wholly & exclusively to the running of your business. These expenses include:
office costs, including stationery or phone bills
travel costs, including business mileage, parking charges or train fares
staff costs if you employ people in your business
things you buy to sell on e.g. stock or raw materials
bank charges incurred in your business bank account
insurance
costs associated with your business premises, including rent, business rates, light and heat etc
advertising and marketing costs
relevant training courses you need for your business
What about personal expenses?
You can’t claim for any personal expenses through your business. You also need to make sure you adjust bills for any personal use element.
For example, if you have one mobile phone that you use for personal and business purposes you’ll need to apportion your phone bills to make sure you only claim for the business element.
Keeping records
You’ll need to keep records of everything you claim for to show HMRC if asked. The easiest way to do this is to use software like Xero, QuickBooks or FreeAgent (the cost of a subscription to one of these is also tax deductible).
Keeping good records will help you make sure you don't pay any more tax than you have to.
Get in touch if you need help with your tax return or if you have any queries on expenses you want to claim.
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