Self employed expenses: What you can claim and how to track

Published Tuesday 18 November 2025

Table of contents

• What are self employed business expenses?
• Why is it important to claim self employed business expenses?
• What are the different types of allowable self employed business expenses?
• What are capital allowances for self employed expenses?
• When can you use simplified expenses?
• How to accurately calculate self employed allowable business expenses
• How to claim self employed allowable business expenses
• Will HMRC ask for proof of self employed allowable expenses?
• How to keep track of your self employed allowable business expenses
• Frequently asked questions about self employed business expenses

Key takeaways

• Track all business expenses throughout the year with receipts and records, as HMRC can request evidence at any time even though you don't submit proof with your tax return.

• Calculate expenses using either exact costs for maximum accuracy or HMRC's simplified expense rates for less paperwork, choosing the method that works best for your business each tax year.

• Claim only the business portion of mixed-use expenses like home office costs, phone bills, or vehicle expenses by splitting costs fairly between business and personal use.

• Utilise cloud-based accounting software to automatically capture expenses and generate real-time reports, helping you stay compliant with Making Tax Digital requirements starting in April 2026.

What are self employed business expenses?

Self employed business expenses are your running costs that you can legally deduct from your tax bill. HMRC classifies certain expenses as 'allowable expenses' - these reduce your taxable profit directly.

Key benefit: Lower your tax bill by claiming legitimate business costs

You can claim a range of allowable expenses as a self-employed person. Allowable business expenses for self employed people typically include things like office supplies and equipment, business travel and job-specific training.

If you’re an electrician, you can claim the cost of a work van and fuel for client visits. If you sell on Etsy, you can claim packaging costs for sending products to customers.

Why accuracy matters:

• Tax savings: If your turnover is £65,000 and your expenses are £10,000, you pay tax on £55,000
• Compliance: Claiming the right expenses helps you avoid HMRC enquiries and penalties
• Peace of mind: Correct claims protect your business reputation

Why is it important to claim self employed business expenses?

Claiming self employed expenses reduces your tax bill and supports business growth. Your tax is calculated on profit (turnover minus expenses), not total revenue.

Primary benefits:

• Lower taxes: Pay only on actual profit after legitimate business costs
• Business investment: Fund training and professional development through allowable expenses
• Cash flow improvement: Keep more money in your business for growth

What are the different types of allowable self employed business expenses?

Self employed allowable expenses fall into seven main categories. Each category covers specific business costs you can deduct:

• Home office: Heating, electricity, council tax, rent portions
• Travel and transport: Business mileage, fuel, parking, public transport
• Office supplies and equipment: Stationery, software, business tools
• Professional services: Accountant fees, legal costs, insurance
• Staff expenses: Salaries, training, National Insurance contributions
• Marketing and advertising: Website costs, promotional materials, directory listings
• Training and development: Business-related courses and professional memberships

Claim the right self-employed business expenses to stay compliant and avoid paying more tax than you need to.

HMRC provides a helpful self employed allowable expenses list, which we explain below.

Home office deductions

Home office expenses let you claim a portion of domestic costs when you work from home regularly. You can only claim the business portion - never the full amount.

Claimable home costs:

• Utilities: Heating and electricity (business portion only)
• Property costs: Council tax, mortgage interest, or rent (business portion)
• Communications: Internet and phone bills (business usage only)

Key rule: Split costs between business and personal use - claim only the business portion.

If you work from home for at least 25 hours a month, you can use simplified expenses. For example, you can claim £312 per year if you work over 23 hours a week. Check HMRC guidance for details. Otherwise, divide your costs by room or by days spent working from home.

Calculation example:

Step 1: £750 annual electricity ÷ 6 rooms = £125 for home office room

Step 2: If you use the room for work four days a week, divide £125 by 7 days and multiply by 4 to get the business portion.

Result: You can claim the business portion of your electricity bill as an allowable expense.

Travel and transport allowable expenses

Travel for business, fuel and parking all qualify as allowable business expenses.

According to HMRC, the following costs can be claimed back:

• vehicle insurance
• repairs and servicing
• fuel
• parking
• hire charges
• vehicle licence fees
• breakdown cover
• train, bus, air and taxi fares
• hotel rooms
• meals on overnight business trips

These costs are not considered allowable expenses – so you'll have to foot the bill yourself:

• non-business driving and travel costs
• fines
• travel between home and work

If you buy a vehicle for business use, follow these rules:

• If you use traditional accounting, you can claim the purchase of a vehicle for business use as a capital expense.
• If you're buying a car for your business and you use cash basis accounting, you can also claim this as a capital expense – but only if you're not using simplified expenses.

Office supplies and equipment claims

Short-term and long-term business expenses

Equipment and supplies are claimed through two different methods depending on their lifespan and cost.

Allowable expenses cover short-term operating costs:

• Duration: Items used for less than two years
• Examples: Office stationery, phone bills, software subscriptions
• Benefit: Immediate full tax deduction

Capital allowances cover long-term business assets (explained in detail below).

Allowable expenses are costs you pay for regularly in your business, such as office supplies and utilities.

Higher costs can also be claimed as business allowable expenses – things like business premises rent, utility bills, and property insurance and security.

Claim capital allowances for items you keep in your business long term, such as:

• equipment
• machinery
• business vehicles

These capital allowances are typically larger assets you expect to last for a long time. While there's no exact time period defined for either category, you can find a comprehensive explanation of how capital allowances work on the HMRC website.

Professional services expenses

You can claim the cost of hiring an accountant, solicitor, surveyor or architect as allowable business expenses. You can claim for any business insurance policy, such as professional indemnity or public liability insurance, too.

Bank, overdraft and credit card charges can be claimed as self employed expenses. So too can interest on bank and business loans, hire purchase interest, leasing payments, and alternative financing options (such as Islamic Finance).

For costs associated with customers not paying you, read HMRC's guidance on claiming for bad debts.

Staff-related allowable expenses

Staff salaries and costs associated with employees all fall within allowable expenses. This includes pensions, staff training and bonuses, as well as employers' National Insurance.

You can claim business expenses for subcontractor costs and agency fees. Carers and domestic help are not included.

Marketing, advertising and branding expenses

Some costs associated with marketing your business can be claimed as allowable self employed expenses. These include newspaper adverts or directory listings, free samples, and website costs.

Entertaining clients, suppliers or customers, and event hospitality are not allowable expenses.

Training and professional development deductions

Training courses that improve the skills you already use in your business can be claimed as allowable expenses. Following recent clarifications, this also includes training to help you keep pace with technology or develop ancillary skills like bookkeeping.

For example, if you're a freelance graphic designer you could claim the cost of a course on new design techniques. If you run a dog training business you could claim the cost of a workshop on training older pets. If you have a professional association membership, you can normally include the courses you need to take to meet your continual professional development (CPD) hours as allowable expenses too.

You can only claim for training that relates to your current business. Training for a new business or revenue stream is not an allowable expense.

Miscellaneous claimable expenses

In addition to the expense categories we've already explored, there are a few more things you can add to your list.

Subscriptions to trade or professional journals, and trade body or professional organisation memberships can be claimed for. Just like learning and development courses, these need to relate to your existing business.

You may be able to claim for charity sponsorships if they meet HMRC criteria, but not for charitable donations.

If you use accrual accounting, you can claim the legal costs of buying machinery as capital allowances.

If you're using your £1,000 tax-free trading allowance, note that you can't claim allowable expenses as part of this. The rules also differ for limited companies – check out HMRC's guidance on company benefits and expenses for more information.

What are capital allowances for self employed expenses?

While allowable expenses cover your day-to-day running costs, capital allowances are for assets you buy to keep and use in your business long-term. Think of things like equipment, machinery, or a work van.

Instead of claiming the full cost in one go, you claim a portion of the asset's value against your profits each year. This helps spread the tax relief over the item's useful life in your business. The rules can vary depending on the type of asset and the accounting method you use, but it's an important way to account for major business purchases.

When can you use simplified expenses?

If you're a sole trader or in a business partnership, you might be able to use simplified expenses. It's a quicker way to calculate some expenses using flat rates provided by HMRC, rather than working out your actual costs.

You can use simplified expenses for:

• Business mileage for your vehicle
• Working from home
• Living on your business premises (for example, if you run a bed and breakfast)

You can use simplified expenses for some costs and actual costs for others. Choose the method that works best for your business each tax year.

How to accurately calculate self employed allowable business expenses

Two calculation methods are available for self employed expenses: exact costs or simplified expenses.

Method 1: Exact costs

• Step 1: Track all expenses throughout the year with receipts
• Step 2: Calculate total expenses by category
• Step 3: Report totals on your Self Assessment tax return
• Best for: Maximum accuracy and potentially higher claims

Method 2: Simplified expenses

• Best for: Less paperwork using HMRC flat rates
• Covers: Vehicle costs, home working, business premises

You can use cloud-based accounting software to capture expenses and see reports comparing your total expenses with your income. Tracking your business expenses gives you valuable insights into your cash flow, profitability and tax liability.

Customisable expenditure reports help you see your allowable expenses and plan your self-employment tax. You can see exactly how much you can claim and work out your taxable income.

Bear in mind that if you're planning to use something for business and personal reasons, you can only claim allowable expenses for the business costs. For example, if your phone contract is £150 a year, and 50% of your calls and messages are for work, you can claim £75 as an allowable expense.

How to calculate simplified expenses for self employed people

Simplified expenses use flat rates instead of actual costs, and can be used by sole traders and business partners with no companies as partners. You can apply these rates to:

• business costs for some vehicles
• working from home
• living in your business premises

For business costs for applicable vehicles:

1. Keep a record of your business miles for the full year
2. Select the correct flat rate for vehicle mileage

The rate for the first 10,000 miles for cars and goods vehicles is 45p per mile

After 10,000 miles it's 25p per mile for cars and goods vehicles

For motorcycles it's 24p per mile

1. Multiply the number of miles you've done in the year by the relevant flat rate

E.g. for 12,000 miles in a company car it's:

10,000 x 45p = £4,500

2,000 x 25p = £500

Total = £5,000

1. Include this amount in the total for expenses on your income tax return

For working from home costs:

1. Keep a record of the hours you spend working from home
2. Select the correct flat rate for working from home costs

For 25-50 hours of business use per month the flat rate is £10

For 51-100 hours of business use per month it's £18

For 101 hours or more it's £26

1. Multiply the relevant flat rate by the months worked

E.g. 6 months at £10 per month and 5 months at £18 per month

6 x £10 = £60

5 x £18 = £90

Total = £150

1. Include this amount in the total for expenses on your income tax return

For living in your business premises:

1. Keep a record of how many people live at your business premises
2. Select the correct flat rate for living in your business premises

If it's just one person (you) the flat rate is £350 per month

If it's two people the flat rate is £500 per month

If it's three or more people the flat rate is £650 per month

1. Multiply the relevant flat rate by the number of months spent living there

E.g. for 12 months living and working from your home with two roommates, your total business premises expenses are £20,000

12 x £650 = £7,800

£20,000 - £7,800 = £12,200

Total claimable amount = £12,200

1. Include this amount in the total for expenses on your income tax return

Calculate the exact costs for all other expenses. Find more information about simplified expenses on the HMRC website.

How to claim self employed allowable business expenses

Self employed allowable expenses are claimed as part of your Self Assessment Tax Return.

To claim self-employed allowable expenses:

1. Keep records of all your self-employed business expenses throughout the year
2. Add up all allowable expenses and enter the total in your self-employment tax return

Or, you can skip the admin and instead use cloud-based accounting software, which automatically totals your allowable expenses. You just need to add the figure from your software's expenses report to your Self Assessment Tax Return.

Will HMRC ask for proof of self employed allowable expenses?

Record keeping is mandatory even though you don't submit proof with your tax return. HMRC can request evidence at any time.

What you must keep:

• Receipts: All expense receipts and invoices
• Bank statements: Showing business payments
• Mileage logs: For vehicle expense claims
• Time records: For home working claims

Retention period: Keep records for at least five years after the tax return deadline.

Keeping accurate records is essential for calculating your self employment tax. Adopting software that's simple to use and HMRC-recognised can help you stay on top of these responsibilities.

How to keep track of your self employed allowable business expenses

Expense tracking prevents tax surprises and improves cash flow management. Without accurate records, you risk overpaying tax or facing compliance issues.

Key benefits of systematic tracking:

• Tax accuracy: Pay exactly what you owe, no more
• Cash flow visibility: See real-time spending patterns
• Audit protection: Ready for HMRC inquiries
• Growth insights: Identify cost-saving opportunities

Solution: Use cloud-based accounting software for automated expense capture and real-time reporting.

Do away with manual expense tracking and use Xero accounting software for sole traders.

Xero makes it easy to see exactly how much you're spending each month, and you can toggle the settings to show which expenses you can claim. Create forecasts and budgets based on real-time data, so you know where you stand today and in the future.

You do not need to wait until tax season to see your self-employed business expenses – you can get a live view at any time.

Digital record keeping is part of Making Tax Digital for Income Tax Self Assessment. This will start from April 2026 for businesses with turnover over £50,000. Using cloud-based software now can help you prepare.

Making expense claims correctly helps you stay compliant with HMRC rules. You can find an accountant or bookkeeper in the advisor directory to help you work out what to claim. For more support with small business money management, visit the cash flow content hub.

FAQs on self-employed business expenses

Find answers to common questions about claiming self-employed business expenses below.

Can I claim expenses from before I officially started my business?

Yes, you can claim for some costs incurred up to seven years before you started trading. These are known as pre-trading expenses. To be allowable, they must be expenses that would have been deductible if you had incurred them after starting your business.

What's the difference between 100% deductible expenses and partial claims?

An expense that is 'wholly and exclusively' for your business can be claimed in full (100% deductible). If an expense has a dual purpose for both business and private use, like a mobile phone or home internet, you can only claim the business portion of the cost. You'll need to find a fair and reasonable way to split the cost.

Is there a limit to how much I can claim in self-employed expenses?

There is no upper limit on the total amount of expenses you can claim, as long as every cost is allowable and you have records to prove it. However, you can choose to use the £1,000 tax-free trading allowance instead of claiming individual expenses. If you use the allowance, you cannot deduct any other expenses for that tax year.

What happens if HMRC questions my expense claims?

If HM Revenue and Customs (HMRC) questions your claims, they can open a compliance check or enquiry into your tax return. They will ask for your records to verify your claims. If they find errors, you will need to pay any extra tax owed, plus interest and a penalty if appropriate.

Can I change from simplified expenses to actual expenses mid-year?

You must use the same method for the whole tax year. You can change your method from one year to the next. For example, use simplified expenses for your vehicle one year, and actual costs the next if it suits your business.