If you work for yourself, your business will incur a variety of operating expenses. As long as these expenses are permissible, you can deduct some of them from your taxable earnings. We took a look at business expenses for the self-employed.
Business Expenses For The Self-Employed – Capital Allowances
If you use traditional accounting, you should claim capital allowances when you purchase items that you plan to use in your business long-term, such as machinery, vehicles used for business, such as automobiles, vans, and lorries, etc.
If you utilise your £1,000 tax-free “trading allowance,” you are not eligible to claim capital allowances.
You can write off the cost of an automobile you purchase for your company as a capital allowance if you utilise cash basis accounting. All other items, however, should be reported as authorised business expenses in the usual manner.
Split-Use Considerations
Only approved expenses are eligible for reimbursement for business costs.
Example: You spent £200 on mobile phone bills last year. You spend £130 on personal calls and £70 on business calls out of this total. As a result, you may claim business costs totaling £70.
You might be eligible to deduct a percentage of your home-based work-related expenses, such as heating, electricity, council tax, mortgage interest, and rent.
Finding a sensible way to divide your costs, such as by the number of spaces you use for business or the percentage of time you spend working from home, is necessary.
Keep It Simple
By employing simplified expenses, you can calculate your business expenses without performing complicated computations. Flat rates are simplified expenses that can be applied to: automobiles, working from home and residing on your property
Offices & Property
Use products you would typically use for less than two years as justifiable expenses, such as:
Rent, rates, power, and insurance expenses for stationary
For machinery you continue to use in your firm, such as computers or printers, make the following claim:
Capital allowances if you use traditional accounting and permitted expenses if you use cash basis accounting
Any non-business use of the space, phones, or other office resources is not admissible as a claim.
Business Expenses For The Self-Employed – Stationery
You may deduct costs for:
Internet, fax, and phone bills
Postage stamps, stationery, and printer cartridges
software used by your company for less than two years and for which you regularly pay the licence renewal fees (even if you use it for more than 2 years)
If you don’t utilise cash basis, you can write off additional software for your company as capital allowances.
Other Stuff
You may deduct costs for:
utilities, property insurance, rent for commercial space, business and water prices, using a portion of your house for business use as an office
You cannot submit a claim for expenses or allowances related to purchasing a building’s space for a business.
Submit expenses for equipment and building upkeep and repairs.
Claim: For modifications to install or replace equipment
costs that are permissible if you utilise cash basis accounting
If you utilise traditional accounting, capital allowances
Some essential building components, such water heating systems, can also be claimed as capital allowances.
Vehicles
You can claim allowable business expenses for:
- 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
You cannot claim for:
- non-business driving or travel costs
- fines
- travel between home and work
