Self Assessment Guide

When you file your Self-Assessment tax return, you can claim a number of expenses against your taxable income. These expenses can help to reduce the amount of tax you owe. The following is a list of typical business expenses that you may be able to claim:

Accountants Chester – Office expenses

You can claim business expenses for items that you’d usually use for less than two years. This includes business stationery like:

phone, mobile, fax and internet bills, postage, stationery, printing, printer ink and cartridges, computer software your business uses for less than two years, computer software if your business makes regular payments to renew the licence (even if you use it for more than two years).

You can also include business equipment that you’ll keep for a longer time, like computers and printers and other computer software, but you may have to claim these as capital allowances if you don’t use cash basis accounting.

Accountants Chester – Business premises

You can claim expenses for:

rent, maintenance and repair, utility bills, property insurance, security.

You can’t claim expenses for buying or building your business premises.

If you work from home, you can offset your costs and you can work out how much you can claim using a simplified HMRC rate.

With the simplified expenses option, you claim the relevant set monthly rate depending on how many hours you work from home:

If you work from home for 25 to 50 hours,  you can claim £10 per month, for 51 to 100 hours, you can claim £18 per month, and

for more than 101 hours, you can claim £26 per month.

This rate does not include internet or telephone costs – these are claimed separately.

Alternatively, you can apportion your home running costs by working out which rooms in your home you use for business, and the percentage of time you spend in them. This is clearly much more complicated and time-consuming but can be worth it if you spend a lot of time working from home.

Accountants Chester – Travel

You can claim business-related car or van costs on your tax return, including:

vehicle insurance, fuel, hire charges, repairs, servicing, breakdown cover.

Vehicle expenses can be difficult to calculate, so you can use simplified vehicle expenses, which is a flat rate provided by the government. This is called the approved mileage allowance payment and how much you can claim depends on how many miles you have driven on business, and the kind of vehicle you are using.

Rates per business mile:

First 10,000 miles Above 10,000 miles
Cars and vans 45p 25p
Motorcycles 24p 24p
Bikes 20p 20p

You can also include business travel by train, bus, plane or taxi, and hotel rooms and meals during overnight business trips.

Bear in mind that travel for things like meetings and site visits is included, but you can’t claim for the cost of travelling between home and work – so commuting or travelling to your business premises doesn’t count.

Also note that if you take a journey for both personal and business reasons, you must be able to separate out the business cost in order to include it.

You can’t claim for entertaining clients, suppliers and customers, or event hospitality.

Finally, if you buy a vehicle for your business and use traditional accounting, you can claim it as a capital allowance. If you use cash basis accounting and buy a car for your business, you can claim it as a capital allowance (if you’re not using simplified expenses). You claim other types of vehicle, like vans, as allowable expenses.

Accountants Chester – Stock and materials

You can include the cost of your stock, your raw materials, and the direct costs that arise from producing your goods.

You can’t claim for goods or materials bought for private use, or depreciation of equipment.

Accountants Chester – Legal and financial costs

If you need to hire a professional like an accountant, a solicitor, a surveyor or an architect for business reasons, you can include the cost in your calculation.

You can also include bank, overdraft and credit card charges, interest on bank and business loans, hire purchase interest and leasing payments. Note that if you’re using cash basis accounting, you can only claim up to £500 in interest and bank charges.

If you use traditional accounting, you can claim money that you won’t receive and don’t think you’ll ever receive (bad debt). That’s because with traditional accounting, you include this debt in your turnover. But you can’t claim for:

debts not included in turnover, debts related to the disposal of fixed assets – for example land, buildings, machinery, bad debts that aren’t properly calculated – you can’t just estimate that your debts are equal to five per cent of your turnover.

You can’t claim for debt in this way when using cash basis accounting, because you only record income you’ve actually received on your tax return.

Finally, you can’t claim fines for breaking the law as business expenses, or for repayments of loans, overdrafts and finance arrangements.

Accountants Chester – Business insurance

You can include the costs of business insurance, for example:

public liability insurance, professional indemnity insurance, employer’s liability insurance.

Accountants Chester – Marketing

You can claim for the cost of marketing, including newspaper advertising, directory listings, mailshots, free samples and website costs.

Accountants Chester – Clothing

You can include the cost of uniform, necessary protective clothing, or costumes for actors or entertainers, but you can’t include the cost of everyday clothing that you wear to work.

Accountants Chester – Staff

Employee and staff salaries count as allowable expenses, as do:

Bonuses, pension contributions, benefits, agency fees, employer National Insurance contributions, training courses related to your business.

Accountants Chester – Subscriptions

You can include the cost of membership to trade bodies or professional membership organisations if they’re relevant to your business, and the cost of subscriptions to trade or professional journals. 

Accountants Chester – Additional tips for completing your tax return:

Start early. The deadline for filing your self-assessment tax return is 31 January each year. Starting early will give you plenty of time to gather all of the necessary information and complete your return accurately.

Beware of Self-Assessment scams. If you’re one of the 12.2 million individuals who are due to file a self-assessment tax return this year, you need to be aware of potential scams out there. For more information read our blog How to avoid Self-Assessment scammers.

Keep good records. It is important to keep good records of your income and expenses throughout the year. This will make it much easier to complete your self-assessment tax return when the time comes.

Use the right tools. There are a number of software programs available to help you complete your self-assessment tax return. These programs can make the process much easier and less time-consuming.

Get help if you need it. If you are unsure about submitting your self assessment tax return, don’t be afraid to ask for help.