There are two methods you can use to work out your allowable home expenses: you can claim a flat rate allowance (also known as simplified expenses), or claim a proportion of your bills. For further information on these methods, refer to our expenses and allowances guide for limited company directors and the self-employed.
If you're a sole trader and aren't sure which method is the better option for your business, you can use Gov.uk's simplified expenses checker tool.
Download our Ultimate Expenses Guide
Download our Ultimate Expenses Guide
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Why should I claim mileage?
As a contractor, freelancer or small business owner, it's important that you make the most of what you can claim-especially as the trips you make can add up over time. Here's an example: if you make a 25-mile round trip twice a week, it adds up to 2,400 miles a year. That's £1,080 that you can as deduction against your business revenue.
To learn more, read our guide on how to claim business mileage.
Can I expense Optical expenses?
You can claim an eye test as an allowable expense, if it is required for the use of visual display equipment in your work.
In general, you can't claim for glasses or contact lenses unless these items are 'wholly and exclusively used for business purposes', and you're able to prove that you don't use them outside of your working houses. One example would be that you have several pairs of glasses, one of which is used only when you're at work.
Can I expense Computer equipment?
Yes, you can claim the purchase of computers as a deductible expense.
Self employed expenses & tax allowances guide
Allowable business expenses are costs that you can claim as a deduction against your revenue, which reduces the amount of tax you need to pay.
Here's an example: if your revenue is £35,000 and your allowable expenses total at £5,000, you'll just be taxed on £30,000.
The rules surrounding allowable business expenses aren't always straightforward, and this is where our guide comes into play.
In this article we will run through the most common expenses that sole trader businesses claim for, along with tips you can implement to ensure that you are keeping proper records.
Bear in mind that this isn't a definitive guide, so if you need personalised advice, it's best to consult our accountants atForma.
Can I claim for fuel as well as mileage?
Mileage claims are designed to help cover your fuel costs, as well as the running costs of having a vehicle. As such, you can't make separate claims for individual expenses such as fuel, electricity or vehicle repairs.
What expenses can I claim as a Limited Company Director?
As a limited company director, there are various allowable business expenses you can claim for. These include (and aren't limited to):
- Pension contributions
- Staff expenses
- Business mileage
- Mobile phone, landline and broadband expenses
- Costs of forming your company
Further information on the types of expenses you can claim for can be found in our limited company expenses and tax allowances guide.
Can I expense Office rental?
Yes, you can claim office rental and the costs of using a coworking space as a deductible business expense.
Self employed advisory fuel rates guide
Advisory fuel rates are recommended repayment amounts a company can use when reclaiming the fuel element on business mileage.
The rates are used to calculate:
- How much employers should reimburse employees for business travel using the company car
- How much employees need to repay employers for private travel using the company car
- The VAT you can claim back on business mileage using your personal vehicle
Can I expense Pensions?
As a sole trader, you can't claim pension contributions as a deductible expense. However, you can get personal tax relief from contributions you make into your pension scheme.
If you're a limited company director, you have the option of making pension contributions through your company. This will reduce your company's profits, and as such reduce the amount of corporation tax your company pays.
How to claim for business mileage
Being self-employed often means having to juggle multiple roles and tasks.
Amidst all your different responsibilities, keeping track of your business mileage can appear tedious-and it can easily become a task that you postpone time and time again. Yet, these little trips can add up, and as a small business owner, it's important that you make the most of what you can claim.
If you're newly self-employed, or just want to get a grasp on the basics of claiming your business mileage, this article is for you.
It explains the essentials, including how you can calculate your costs, the records you need to keep, and other important information that you need to be aware of.
Both business owners and employees can claim business mileage.
Can I expense childcare?
As a sole trader, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the tax-free childcare scheme.
As a limited company director, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the childcare voucher scheme or tax-free childcare scheme.