SELF EMPLOYED EXPENSES
When you’re self employed you will have various costs to running your business. You can deduct these costs to work out your taxable profit.
HMRC use the idea of a cost being ‘wholly and exclusively’ related to your trade. This means that if the cost is used completely in the course of conducting your business you can deduct it.
The most common expenses which are claimed by businesses are as follows:
COST OF GOODS
When you buy and sell goods you can claim for the purchase and costs of creating your final product. These are your cost of sale.
OFFICE COSTS
Most businesses will have office costs, these range from the small such as telephone, broadband, stationery and postage to larger costs such as rent, rates and insurance.
Repairs to your office can also be deducted but the cost of buying a new premises can not.
TRAVEL AND CAR
Travel for the self employed generally includes fuel, parking, train, bus and air fares, hotel and accommodation and meals on overnight business trips.
You cant include fines or travel for your normal commute.
When you buy a car you can claim something called capital allowances which will be a percentage of the cost based on the type of car you have bought.
STAFF EXPENSES
You can also deduct the cost of employing staff which includes the following elements, salaries, bonuses, pensions, benefits, subcontractors and national insurance.
LEGAL AND ACCOUNTANCY COSTS
As a business you will incur legal and accountancy costs. These are deductible expenses.
You can not claim for fines for breaking the law. Legal expenses in relation to buying property or machinery are not allowable.
BANK AND FINANCE CHARGES
Any finance charges from banks, interest on loans and overdrafts can be claimed as an allowable expense.
You can not claim for the capital repayment of loans.
You can even include amounts which you include in your turnover but never actually receive (bad debts).
INSURANCE
You can claim for any insurance policy your buy for your business.
MARKETING AND ADVERTISING
Money spent on advertising, whether it be for your website or advertising in a newspaper.
ENTERTAINMENT
You can not claim for entertaining clients customers or suppliers.
All businesses are different, if you would like to discuss your income and expenditure account, please get in touch today.