Top 5 Tax Deductions For UK Self-Employed

Entrepreneurship 14.04.2016 24.01.2022 3 min

This guest post has been written for Zervant by Taxback.com, who provides tax refunds and tax return services for over 13 countries. Confused by your taxes? Make it hassle-free by using Taxback.com or get a free estimate of your tax refund using one of their online tax calculators.

Are you self-employed in the UK? There are lots of nice benefits to running your own business and one of them is great tax deductions.

What’s the deal?

The general rule is if you incur an expense “wholly and exclusively” in the course of a business operated with the intention to realise profit, you can deduct it as a business expense.

Table of Contents

Top 5 Most Common Tax Deductions in the UK

1. Computers

If you buy a computer solely for business purposes, then you can claim back the expense as part of your UK annual investment allowance on your UK tax return, which is due with the HMRC (HM Revenue & Customs) by midnight 31st January following the tax year to which it relates.
If you use your computer for both personal and work related activities, you can claim the proportion of the expenditure that relates to business use on a time spent basis.

2. Bills

If you work on a business premises, you can claim back on rent, heat, power and insurance costs. You can’t claim on the costs of actually buying your business premises though. If you work at home you can claim the ‘business proportion’ of such expenditure.

3. Car, Van and Travel Expenses

As long as it’s for business purposes, you can claim on the cost of:

Car and van insurance
Repairs, servicing
Fuel, parking, hire charges, vehicle license fees
AA/RAC membership
Train, bus, air, taxi fares
Hotel room costs and subsistence on overnight business trips

You can claim on the expense of using your vehicle to travel for business. There are 2 ways to calculate this:

Maintain detailed records of mileage accumulated through business and personal travel and pro-rate the expenses referred to above.
Or use a fixed rate for each mile travelled for work purposes (currently 45p per mile for the first 10,000 miles and 25p per business mile thereafter).

It should be noted that if the self-employment takes place at the same location for a period that is expected to last more than 24 months then this does not constitute as a qualifying mileage for business purposes.

4. Clothing

If you require specialist clothing, such as a uniform or protective outerwear for your job, you can reclaim these costs on your tax return. Clothing such as business suits do not qualify for this deduction.

5. Broadband/phone expenses

You can also claim back on all business related costs for your broadband/phone as well as a proportion of the cost of line rental and broadband connection on your tax return.

More Help For Small Business Owners

Small business owners need all the help they can get. Whether that’s through saving money with tax deductions or with lessons on how to better run their business or do their taxes. Check out the following blog posts we’ve created to help out small business owners:

– Dig into and learn from our insights on the entrepreneurs work-life balance
– Automate your business and save money and time
– How to write your first business plan with our free template

Remember to keep records of your expenses

Always keep records of your expenses. As a general rule it’s wise to keep receipts for as long as 6 years. For example, cashbooks, invoices, mileage records, bank statements, etc.

Claiming your tax back

If you need help filing your UK self assessed tax return or want to find out what other deductions you could be eligible for, why not get in touch with Taxback?