self employed expenses

Tax Allowable Expenses – A Guide To Self Employed Individuals!

While calculating that how much tax you are required to pay each year, self-employed expenses will be subtracted from your turnover. All expenses of your business activity are not allowable. You must know that what cost can be claimed on tax returns.

In this blog, we will cover the following as a basic guide for self-employed individuals.

  • How To Define Allowable Expenses?
  • What to claim On Tax Returns?
  • Calculate Self-Employed Expenses

Tax Allowable Expenses- Full Guide

How To Define Allowable Expenses?

As mentioned above, self-employed expenses can be subtracted but not all of them.  Clear terms and conditions are provided by HMRC. This explains that what is included and what can’t be subtracted. The cost that is allowed to include in the calculation is what we call allowable expenses.

After clearly defining, the purpose of HMRC is to ensure that you include only the expenses that are strictly adhered to your business. Another advantageous way of understanding allowable expenses is that you will not pay extra tax. The right amount of tax is clear to the businessmen.

In a scenario when the business is earning 25000 pounds in the tax year, however, the allowable expenses are about 5000 pounds. It is required to pay tax only on 20000 pounds because this is your taxable profit.

Please seek professional advice before you claim allowable expenses. Get in touch with one of our experts 0800 644 1258 or 0203 4411 258 or email us at [email protected].


What to claim On Tax Returns?

Here is a list of the cost and important explanations that you will usually count while doing your tax returns. In other words, we call them allowable business expenses as well.

  • Clothing
  • Marketing
  • Legal And Financial Cost
  • Travel
  • Business Premises


The cost of your uniform or protective clothing can be included in the list of allowable expenses. In some cases, the cost of entertainers is also on the list. Mostly, the uniform you wear daily is added only.


The cost spent in promoting your business through advertisement is also included. This includes mailshots, newspaper ads, website cost, and directory listing, etc.

Legal And Financial Cost:

In the calculation of allowable expenses, the cost of hiring accountants, architects who will visit the sites, solicitors, and surveyors for business reasons is also included.

Cost of activities with the bank for business purposes like credit cards, interest amounts, and lease payments can also be added. In some cases, only cash accounting is happening. Then only 500 pounds can be claimed.

In traditional accounting, there are possible bad debts with no expectation of receiving back. This amount is included in the list as well. Mostly, in traditional accounting, such bad debts are put into a turnover. However, you can’t claim for the following:

  • Debts that are not added to the turnover.
  • Bad debts that are not properly calculated – only an estimated amount without clear calculations.
  • Debts that are associated with fixed assets like machinery, building, and land, etc.

Fines that are charged to you for breaking business law are not included in self-employed expenses with the repayment of loans and other finance agreements.

Get in touch with our qualified accountants to have a better understanding of how to deal with business bad debts. 


Business-related travel that you do for the intention of business meetings or other affairs can be claimed on the business return. furthermore, this includes the following:

  • Repairs
  • servicing
  • Breakdown Covers
  • Hire Charges
  • Fuel
  • Vehicle Insurance

It is often found difficult to calculate exact vehicle charges, the flat rate is help that is provided by the Government. Simplifies vehicle expenses can also be used. In case you are using cash accounting and you intend to buy a car for business activities, this will be claimed as a capital allowance. Whereas, the other vehicles like vans, etc will come under allowable expenses.

Business Premises:

Amount spent on rent, maintenance, security, repair, utility bills, and property insurance can also be claimed. Buying a building for the business premises does not come in the count though.


To give final thoughts to this discussion, we can say that one must not only rely on tax records when you intend to calculate your allowable expenses, such calculations depend so much on the type of accounting you have. Whether you have traditional accounting or cash accounting in use, the processing varies accordingly.

We hope this blog helped you understand self-employed expenses better!

Feel free to get in touch with our experts at Accotax to know more about your expenses and witness your business growth like never before.

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