Every pound you legitimately claim as an expense reduces your tax bill. Yet many freelancers either overclaim (risking HMRC investigation) or underclaim (paying more tax than necessary). This guide covers exactly what you can and cannot deduct.
The Golden Rule
An expense is allowable if it is incurred wholly and exclusively for business purposes. If something has a dual purpose (business and personal), you can only claim the business proportion.
Office and Equipment
- Computer, laptop, tablet — full cost if used solely for business
- Software subscriptions — design tools, accounting software, project management
- Office furniture — desk, chair, monitor
- Stationery and printer supplies
- Phone and phone contract — business proportion only
Working from Home
You have two options:
Option 1: Simplified Expenses
HMRC provides flat rates based on hours worked from home per month:
- 25-50 hours: £10/month
- 51-100 hours: £18/month
- 101+ hours: £26/month
Option 2: Actual Costs
Calculate the business proportion of your household costs (rent/mortgage interest, council tax, utilities, broadband) based on the number of rooms used and time spent working.
Travel
- Mileage — 45p per mile for the first 10,000 miles, then 25p per mile
- Public transport — trains, buses, taxis for business travel
- Parking and tolls — for business journeys
- Accommodation — for overnight business trips
Commuting Is Not Claimable
Travel between your home and a regular place of work is commuting, not business travel. However, if you work from home and travel to a client's office, that journey is typically claimable because your home is your primary place of business.
Professional Services
- Accountant fees
- Legal fees (business-related)
- Professional indemnity insurance
- Professional body memberships and subscriptions
- Trade publications and reference materials
Marketing and Advertising
- Website hosting and domain names
- Online advertising (Google Ads, social media ads)
- Business cards and printed materials
- Portfolio hosting services
- Networking event admission fees
Training and Development
Courses and training are claimable if they update or maintain existing skills used in your current business. Learning an entirely new skill for a new line of business is generally not allowable.
What You Cannot Claim
Personal clothing (even if you wear it for client meetings)
Gym memberships (unless you are a fitness professional)
Fines and penalties (parking tickets, HMRC fines)
Entertainment (client lunches, drinks) — not allowable for sole traders
Your own salary or drawings
Personal proportion of dual-use items
Record-Keeping
HMRC requires you to keep records for at least 5 years after the 31 January submission deadline. Keep:
- All receipts (digital photos are acceptable)
- Bank statements showing business transactions
- Invoices sent and received
- Mileage logs for vehicle claims