Basic rule: allowable business expenses reduce the profit on which you pay Income Tax. Private spending is not deductible, and where a cost is partly business and partly personal you normally claim only the business element.
Common allowable expenses
- Office costs, stationery and qualifying software.
- Business phone and internet use.
- Business premises costs.
- Business travel and qualifying vehicle costs.
- Staff costs where applicable.
- Stock, materials and goods for resale.
- Insurance and qualifying professional fees.
- Marketing and advertising.
Working from home
You may be able to claim a reasonable proportion of costs such as heating, electricity and internet, or use simplified expenses where the conditions are met.
Vehicles and mileage
You can use actual allowable vehicle costs in appropriate circumstances or simplified mileage rates. The best method depends on the vehicle and your existing tax treatment.
Mixed personal and business costs
If a mobile bill is partly personal, only the business portion is deductible. Keep a reasonable basis for any apportionment.
Capital purchases
Equipment and vehicles can have different tax treatment depending on your accounting basis and the asset. Do not assume every large purchase is simply an expense in the year you pay for it.
Keep digital records
Regular bookkeeping makes expense claims more accurate and will become increasingly important as more sole traders enter MTD for Income Tax.
Frequently asked questions
Can I claim food while working?
Ordinary meals are usually personal. Certain business travel and overnight subsistence costs can qualify in appropriate circumstances.
Can I claim my mobile phone?
You can normally claim the business element of phone costs. Private use should be excluded.
Can I use simplified expenses?
Eligible sole traders and qualifying partnerships can choose simplified flat-rate methods for certain vehicle, home-working and business-premises costs.