You can deduct these costs called ‘allowable expenses’, to work out your taxable profit but remember if you’re using the £1,000 tax-free trading allowance you can’t claim any additional expenses.
Allowable expenses include office, property and equipment, travel including cars & vans, staff any legal and financial costs and marketing and subscriptions.
You can’t claim for anything you spend on personal things such as your home and accommodation, food shopping, clothing, holidays – nor anything you buy for you and your family.
You may want to use simplified expenses – this means you claim a flat rate instead of working out the actual costs.
For example for car travel you can claim 45p/mile up to 10 000 miles & then 25p/mile over this amount.
If your income is above £90,000 (the VAT threshold), you’ll need to list each expense individually under the appropriate heading in the tax return.
This also applies if you didn’t trade a full year but would have earned this amount or more if you had for example your income for six months was £50,000 so in 12 months it would have been £100,000
If your income is less than £90,000, it’s up to you whether you give HMRC your total amount of expenses or list them individually.
It’s important you keep records and proof of your business costs – you’ll need them to complete your self-assessment tax return & sometimes HMRC ask to see these.
You don’t need to send nor attach your receipts with your return.
You can find more information about self-assessment on gov.uk
