Self Employment Tax Guide​

Contents

1. Bookkeeping
2. Allowable expenses
3. Self Assessment – Register as Self Employed
4. Self Assessment – Filing and payment regime
5. Self Assessment – Penalty and late payment regime
6. National Insurance
7. VAT
8. Commercial considerations

Bite Size Expense Guide

Below are some of the common costs that you can claim as allowable expenses:

Car, van and travel expenses

• vehicle insurance
• repairs and servicing
• fuel
• parking
• hire charges
• vehicle licence fees
• breakdown cover
• train, bus, air and taxi fares
• hotel rooms
• meals on overnight business trips

You can’t claim for:

• non-business driving or travel costs;
• fines; or
• travel between home and work.

Simplified mileage claims

Instead of the actual costs you can calculate your car, van or motorcycle expenses using a flat rate for mileage.

Cars and goods vehicles

• 45p for the first 10,000 miles
• 25p after 10,000 miles

Motorcycles

• 24p for all miles

If you opt to use the simplified mileage method, you should keep a detailed mileage log of your business journeys. We can provide a mileage log sheet to assist you with this task. If you use the simplified method you can only claim the pence per mile, no other general motor costs can be claimed.

Clothing expenses

• uniforms
• protective clothing needed for your work
• costumes for actors or entertainers

You can’t claim for everyday clothing, i.e. general office clothing (even if you wear it for work).

Staff expenses

• employee and staff salaries paid through the PAYE system
• bonuses
• pensions
• benefits
• agency fees
• subcontractors
• employer’s National Insurance

Please contact us for professional advice when paying any out of pocket expenses to employees.

Office, property and equipment

• phone, mobile, fax and internet bills (percentage of business use only)
• postage
• stationery
• printing
• printer ink and cartridges

Rents, rates, power and insurance costs

• rent for business
• business and water rates
• utility bills
• property insurance
• security
• using your home as an office (only the part that’s used for business, please contact us for further details)

Reselling goods

• goods for resale (stock)
• raw materials
• direct costs from producing goods

Items purchased for private use are not allowed.

Insurance policies

You can claim for any insurance policy for your business, such as:

• public liability insurance
• professional indemnity insurance
• employer's liability insurance

Legal and financial costs

You can claim costs for:

• hiring of accountants, solicitors, surveyors and architects for business reasons

You can’t claim for:

• legal costs of buying property and machinery as these are capital costs – you can usually claim for these costs as capital expenditure (please contact us for details)
• fines for breaking the law

Bank, credit card and other financial charges

• business bank, overdraft and credit card charges
• interest on bank and business loans
• hire purchase interest on business assets
• leasing payments on business assets
• alternative finance payments, e.g. Islamic finance

Marketing and entertainment

• advertising in newspapers or directories
• bulk mail advertising (mailshots)
• free samples
• website costs
• annual staff party (up to £150 per head, contact us for more details)

Claims for entertaining clients, suppliers or customers are specifically disallowed by HMRC.

Subscriptions

• trade or professional journals
• trade body or professional organisation membership if related to your business