Detailed List of Tax Allowable Expenses
Allowable Revenue Expenditure
Please note that allowable revenue expenditure you incur up to seven years prior to the commencement of your freelancing is deductible from your profits in your first accounting period.
The Inspector of Taxes (HMRC) will allow revenue expenditure as a deduction from your freelance income when it is incurred wholly and exclusively for the purposes of your profession. The following is a list of the expenditure which HMRC will normally allow:-
- Accountants Fees including bookkeeping fees.
- Advertising, publicity, brochures, photographs, business cards and flyers.
- Agents commission.
- Bad debts (included in turnover).
- Bank charges (contact us to obtain free banking).
- Books not retained for more than two years.
- Bulbs, fuses, locks, keys, plugs, leads and minor repairs.
- Casual labour (check whether to be paid through PAYE).
- Computer consumables including CDs, DVD, USB memory sticks, external hard drives, (backup) and software annual licence fee.
- Courier charges.
- Data protection registration and renewal fees.
- Entertaining – expenditure on business entertainment or gifts is not allowable as a deduction against profits, even if it is a genuine expense of the trade or business. However, if the total cost of all assets gifted to the same person in the same basis period is not more than £50, and the gift bears the business name, logo, or a clear advertisement, and the gift does not include food, drink, or tobacco, it is allowed. The cost of staff entertaining is specifically allowed.
- Fines & Penalties for a breach of regulations, or as a result of a prosecution for a trader’s breach of regulations, will not be an allowable expense. However payments for damages that are compensatory rather than punitive are tax deductible. Also, where an employer pays fines that are a liability of an employee, so that the employee is taxable on the payment as employment income, the cost to the employer of paying the fine is allowable in computing his/her trading profits.
Gifts to charity/ local good causes and gifts to customers costing up to £50 and bearing the business name.
Heat and light - calculate business use on area occupied.
Hire and lease.
Insurance including office and business property policies.
Interest payable on a business loan. Also the incidental costs of raising that loan are allowable. (Careful as there are special rules if you use the “Cash Basis”).
Journals and catalogues.
Legal costs including fee recovery and to fix engagements.
Miscellaneous expenses - give a full description of each item and state why you are claiming it.
Motoring expenses (include motor cycle and/ or car), keep a log of the total and business mileage for each vehicle so that the business element can be calculated:-
- Hire of protective clothing/ uniform.
- Laundering and dry cleaning of protective clothing/ uniform.
- Cost of protective clothing/ uniform.
- Specific workwear for engagement (at behest of engager and no private use).
Newspapers and journals (if specific to your work).
Own property - calculate business percentage on floor area:-
- Breakdown subscription/ insurance.
- Car hire, petrol allowance to shared car driver.
- Car repairs, servicing, MOT, oils, antifreeze.
- Motor insurance.
- Parking at engagements, tolls and ferries.
- Road fund licence.
Pension contributions by an employer to a registered pension scheme in respect of any employee will be an allowable expense unless there is a non-trade purpose for the payment. One situation where all or part of a contribution may not have been paid wholly and exclusively for the purposes of trade, is where the level of remuneration package is excessive for the value of work undertaken by that individual for the employer, or the contribution is linked to the cessation of a trade. The deduction is for the period of account in which contributions are paid by the employer, and for no other period, unless either the deduction is for the period of account in which contributions are paid by the employer, and for no other period, unless wither the deduction is required to be spread over a number of periods, or the deduction is allowed for an earlier period.
Photocopying and printing.
Porterage, carriage, securicor.
Purchases of stock/ materials.
- Rent and rates.
- Repairs and maintenance.
Removal expenses If your business is not moving to a larger premises such expenses are allowed. However if your business is moving to a significantly larger location, such that removal costs will be an enduring benefit to the trade, the expenses are capital in nature and not allowed.
Research assistance and material.
Rent and rates of premises - calculate business percentage on floor area basis. Any premiums paid to a landlord are allowable if treated as a property business receipt by the landlord.
Secretarial assistance including payments to spouse/ partner at the market rate for the work provided - to be paid through PAYE system.
Software for your computer, web domain registration and hosting fees.
Tools - hand and electric (not kept for more than 2 years).
Staff welfare including first aid and beverages and Christmas party.
Stationery and printing including inkjet cartridges and toner.
Subscriptions to professional bodies.
Subsistence - you are allowed to claim the cost of all your meals (and drinks) when on overseas engagements. Only claim the cost of the evening meal when on business in the UK and daytime meals incurred on business travel (itinerant).
- Batteries for radio/ cassette recorder/ calculator.
- Memory cards.
Training for engagements in hand.
Courses to maintain, update & develop existing skilss are allowable however courses for the acquisition of new expertise is not allowable (i.e. it would be a capital expense).
- Landline - request call transaction listing from the line provider to calculate business amounts.
- Internet connection.
- Coin box calls.
Use of home as office.
Wages and salaries - to be paid through PAYE.
Warranties. e.g. PCs.
Website maintenance, domain fee and cyber-cafes. Also updating is a revenue expense but the design of a website that will directly generate subscriptions etc may be capital expenditure on which you can claim capital allowances.
- Bicycle repairs and maintenance, consumables and insurance - calculate the business use on a mileage basis.
- Fares to the engager.
- Fares to other than engager, e.g. suppliers, libraries, seminars.
- Travel cancellation fees.
- Travel insurance.
- If you are overseas for more than 60 days on business, the expense of a journey made by your spouse/civil partner/child is also allowable but limited to two return journeys for each tax year.
A deduction from your taxable income can be made in respect of your expenditure on 'Fixed Assets' namely the movable tangibles likely to last over two years that are used in your business. The following are some examples:-
- Agricultural buildings and works.
- Books including reference books.
- Camera, projector, screen.
- Carrying case.
- Computer and printer.
- Fax Machine.
- Industrial buildings.
- Legal expenses on purchase of property.
- Motor vehicle including car and van.
- Office furnishings including carpets and curtains.
- Office furniture including desk, chair, filing cabinets and bookcase.
- Plant and machinery (equipment).
- Research and development.
- Telephone including mobile phone.
Remember that when you commence your business that you can claim capital allowances on the 'Fixed Assets' which you have introduced to the business even if you purchased the item several years before you commenced your business.
Click here Guide to Capital Allowances regime.
Click here to email Brian Luxford for further information of if you would like to ask him a question.
This material provides only an overview of the regulations in force and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.