If you\u2019re self-employed, your business will have various running costs. You can deduct some of these costs to work out your taxable profit as long as they\u2019re allowable expenses.<\/p>\n
Example<\/p>\n
\u2018Your turnover is \u00a340,000, and you claim \u00a310,000 in allowable expenses. You only pay tax on the remaining \u00a330,000 – known as your taxable profit.\u2019
\nAllowable expenses don\u2019t include money taken from your business to pay for private purchases.
\nIf you run your own limited company, you need to follow different rules. You can deduct any business costs from your profits before tax. You must report any item you make personal use of as a company benefit.<\/p>\n
Costs you can claim as allowable expenses<\/p>\n
These include:
\n\u2022 office costs, eg stationery or phone bills
\n\u2022 travel costs, eg fuel, parking, train or bus fares
\n\u2022 clothing expenses, eg uniforms
\n\u2022 staff costs, eg salaries or subcontractor costs
\n\u2022 things you buy to sell on, eg stock or raw materials
\n\u2022 financial costs, eg insurance or bank charges
\n\u2022 costs of your business premises, eg heating, lighting, business rates
\n\u2022 advertising or marketing, eg website costs<\/p>\n
You can\u2019t claim expenses if you use your \u00a31,000 tax-free \u2018trading allowance\u2019.
\nContact the Self Assessment helpline if you\u2019re not sure whether a business cost is an allowable expense.
\nCosts you can claim as capital allowances<\/p>\n
If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, eg:<\/strong><\/p>\n \u2022 equipment If you use cash basis<\/strong><\/p>\n If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.<\/p>\n If you use something for both business and personal reasons you can only claim allowable expenses for the business costs.<\/p>\n Example \u2018Your mobile phone bills for the year total \u00a3200. Of this, you spend \u00a3130 on personal calls and \u00a370 on business. If you work from home<\/strong><\/p>\n You may be able to claim a proportion of your costs for things like: You\u2019ll need to find a reasonable method of dividing your costs, eg by the number of rooms you use for business or the amount of time you spend working from home. Simplified expenses<\/strong><\/p>\n You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for: Source (www.gov.uk)<\/p>\n If you need any advice or assistance on which areas of your business you can claim expenses on, Sutton McGrath Hartley are here to help. Please get in touch on 01142664432 or email your enquiry to info@smhca.co.uk<\/p>\n","protected":false},"excerpt":{"rendered":" If you\u2019re self-employed, your business will have various running costs. You can deduct some of these costs to work out your taxable profit as long as they\u2019re allowable expenses. Example \u2018Your turnover is \u00a340,000, and you claim \u00a310,000 in allowable expenses. You only pay tax on the remaining \u00a330,000 – known as your taxable profit.\u2019 Allowable expenses don\u2019t include money taken from your business to pay for private purchases. If you run your own limited company, you need to follow different rules. You can deduct any business costs from your profits before tax. You must report any item you make personal use of as a company benefit. Costs you can claim as allowable expenses These include: \u2022 office costs, eg stationery or phone bills \u2022 travel costs, eg fuel, parking, train or bus fares \u2022 clothing expenses, eg uniforms \u2022 staff costs, eg salaries or subcontractor costs \u2022 things you buy to sell on, eg stock or raw materials \u2022 financial costs, eg insurance or bank charges \u2022 costs of your business premises, eg heating, lighting, business rates \u2022 advertising or marketing, eg website costs You can\u2019t claim expenses if you use your \u00a31,000 tax-free \u2018trading allowance\u2019. Contact the Self […]<\/p>\n","protected":false},"author":4,"featured_media":3376,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3,4],"tags":[55,83,13,60,61,14],"class_list":["post-3372","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","category-chartered-tax-advisers","tag-accountants","tag-chartered-accountants","tag-inheritance-tax","tag-sutton-mcgrath-hartley","tag-tax-advisers","tag-tax-planning"],"acf":[],"yoast_head":"\n
\n\u2022 machinery
\n\u2022 business vehicles, eg cars, vans, lorries
\nYou can\u2019t claim capital allowances if you use your \u00a31,000 tax-free \u2018trading allowance\u2019.<\/p>\n
\nYou can claim for \u00a370 of business expenses.’<\/p>\n
\n\u2022 heating
\n\u2022 electricity
\n\u2022 Council Tax
\n\u2022 mortgage interest or rent
\n\u2022 internet and telephone use<\/p>\n
\nExample \u2018You have 4 rooms in your home, one of which you use only as an office.
\nYour electricity bill for the year is \u00a3400. Assuming all the rooms in your home use equal amounts of electricity, you can claim \u00a3100 as allowable expenses (\u00a3400 divided by 4).
\nIf you worked only one day a week from home, you could claim \u00a314.29 as allowable expenses (\u00a3100 divided by 7).\u2019<\/p>\n
\n\u2022 vehicles
\n\u2022 working from home
\n\u2022 living on your business premises<\/p>\n