If you’re self-employed, your business will have various expenses that can be deducted in your Self-Assessment tax returns. To deduct an expense from your tax, you must have incurred it for business use.
However, this doesn’t mean you can’t deduct a cost simply because the item can be used outside of business hours. There are many allowable expenses you can claim to legitimately reduce the amount of tax you pay.
Running your own business isn’t always easy. Therefore, we’ve rounded up 11 Self-Assessment expenses you may be unaware of to help you with your business.
Read Now: How Do I File A Self Assessment Tax Return?
Home Office Expenses
For many people, working from home is one of the main benefits of being self-employed. But did you know you can also claim expenses to cover the cost of running your business from home? HMRC allows you to claim a range of expenses pertaining to office supplies.
These include:
- Telephone
- Mobile phone
- Postage costs
- Business stationary
- Printing costs
- Internet
You can even include a claim for your computer or laptop – if it’s used for business. For bigger expenses you may need to claim these as capital allowances.
Your Mortgage and Utilities
If you work from home, you can claim a proportion of your bills as allowable expenses, including:
- Gas
- Electric
- Water
- Broadband
- Telephone
However, you must calculate how much of each bill applied to your business. You can do this by using calculating the percentage of your house used for business purposes. For example, if you work from a 4-room house (kitchen and bathroom don’t count) and one room is used solely for business purposes you can claim 25% of your annual bills as Self-Assessment expenses.
Read Now: What Expenses Can I Claim If I’m Working From Home?
Travel Costs
Do you travel as part of your business? If yes, then you should be claiming a mileage allowance as part of your Self-Assessment return.
Allowable travel business expenses include:
- Vehicle insurance
- Repairs and servicing
- Fuel
- Parking
- Breakdown cover
- Train, bus, air and taxi fares
- Hotel rooms
- Meals on overnight business trips
Legal and Financial costs
Any business costs associated with hiring an accountant, solicitor, surveyor, architect or any other professional you’ve paid for should be included in your Self-Assessment expenses. As well as this you can include a range of bank and insurance costs.
Allowable expenses include:
- Bank, overdraft and credit card charges
- Interest on bank and business loans
- Hire purchase interest
- Leading payments
- Other finance payments such as Islamic finance.
Read Now: A Bookkeeper’s Guide to claiming Tax Deductions
Unpaid Invoices
You know the drill: you get a new customer, provide them with a product or service, send them an invoice and then realise the money’s not coming. However, these unpaid invoices can be written-off in some situations.
This Self-Assessment expense is often overlooked and unused. However, it is one of the most beneficial ones you should be claiming as a business owner.
Unpaid invoices are tax-deductible, but watch out for these exceptions:
- Invoices that weren’t included in your turnover
- Invoices that weren’t properly calculated
- Invoices that are related to the disposal of fixed assets, such as land, buildings or machinery.
You also must be using traditional accounting and not cash basis accounting as cash basis accounting only records income on your return that you have actually received.
Marketing and Advertising Costs
In most cases, your advertising costs, marketing and promotion costs are deductible business expenses. Very generally, if a cost is related to promoting your brand and selling goods, it counts as an advertising expense and that entitles it to be deductible.
HMRC will allow you to claim business expenses for:
- Website costs
- Mailing out leaflets or letters
- Advertising in newspapers or directories
- Free samples
Clothes
No, this does not mean you can go on a massive tax-free shopping spree! There are certain items of clothes you can claim on your Self-Assessment.
Permitted clothing expenses include:
- Work-related uniforms
- Protective clothing needed for work
- Costumes for actors or entertainers
Unfortunately, you can’t claim everyday outfits that you choose to wear to work.
Stock and Materials
You can claim tax back on the items that you resell, including:
- Stock
- Raw materials that you use to make goods for sale
- Direct costs from producing those goods.
Staff Costs
You can claim a wide range of expenses regarding employment costs if you employ permanent workers, seasonal employees, or contractors to help you run your business.
When filing your Self-Assessment return include the following:
- Employee and staff salaries
- Bonuses
- Pensions
- Benefits
- Agency fees
- Subcontractors
- Training courses for your business
Please note there are some staff costs that HMRX does not view as a permitted business expense. For example, child care costs.
Read Now: Quick Tips on Budgeting When Self-Employed
Council Tax
Just as you’re permitted to count a portion of your mortgage and utility expenses, you are also permitted to factor in part of your council tax bill. The same rule applies if your business space takes up 25% of your property – then you can claim up to 25% of the cost of your council tax.
Training and Personal Development
When it comes to tax purposes, there’s a difference between training that’s thought of as an investment and training that’s an expense. Training or personal development to keep your existing skills up to date counts as an allowable expense.
This essentially refers to seminars and courses that update your existing business knowledge. For an example, if an electrician went on a training course to further their knowledge regarding electrical work.
If you want to learn something new, this is an investment and you won’t be able to deduct this cost as a business expense. Instead, you can claim capital allowances tax relief.
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We understand that running your own business can be stressful. Here at Count, we are committed to helping you make the best choice. Feel free to contact us here today!